Advantage Of Price Floor Small Business

Small businesses can be nimble and innovative.

Advantage of price floor small business.

A maximum price means firms are not allowed to set prices above a certain level. Price floor are used to give producers a higher income. It is legal minimum price set by the government on particular goods and services in order to prevent producers from being paid very less price. Price floor is a price control typically set by the government that limits the minimum price a company is allows to charge for a product or service its aim is to increase companies interest in manufacturing the product and increase the overall supply in the market place.

The aim is to reduce prices below the market equilibrium price. They are used to increase the income of farmers producing goods it is obvious in this situation that by incresaseing the price above equilibrum governemt is assisting the producers and not the consumers a higher price is going to mean a higher income for the producer. A price floor is an established lower boundary on the price of a commodity in the market. Governments usually set up a price floor in order to ensure that the market price of a commodity does not fall below a level that would threaten the financial existence of producers of the commodity.

Many small business owners are experts in their fields before branching out and starting a business. But this is a control or limit on how low a price can be charged for any commodity. This control may be higher or lower than the equilibrium price that the market determines for demand and supply. The advantage is that they will lead to lower prices for consumers.

The vendor or supplier has an incentive to lower its price per ton. A small advertising business may be run by a former creative director of a large ad agency or the owner of a video production house may formerly be a director of independent films. Some people think that bigger companies take advantage of small.