A government-imposed lower limit on the price that may be charged for a product. If that limit is binding, it implies a situation of excess supply, which the government may need to purchase itself to keep price from falling.
A minimum price that is set so that the price of a resource, good and service will not be permitted, due to the forces of supply and demand to fall below the minimum. Price floors are sometimes set for agricultural products.
A hedging concept that contractually establishes a minimum price to be paid for a security or commodity over a specified period of time. The price floor only applies when the market price is below the price floor. See also price cap.
A price floor is a regulation that makes it illegal to charge a price lower than a specified level. An "effective" price floor (above the equilibrium price) generally leads to a surplus, which is an unintended (but predictable) consequence.
A price floor is a government-imposed limit on how low a price can be charged for a product. For a price floor to be effective, it must be greater than the equilibrium price. In the first graph at right, the supply and demand curves intersect to determine the free-market quantity and price.