Consumer Surplus Graph With Price Floor

Price floors are used by the government to prevent prices from being too low.

Consumer surplus graph with price floor.

The video shows the impact on both producer surplus and consumer surplus. Price floors are also used often in agriculture to try to protect farmers. The effect of government interventions on surplus. The most common price floor is the minimum wage the minimum price that can be payed for labor.

Consumer surplus is an economic measurement to calculate the benefit i e surplus of what consumers are willing to pay for a good or service versus its market price. This is the currently selected item. Minimum wage and price floors. Consumer and producer surplus.

A price floor is the lowest legal price a commodity can be sold at. The consumer surplus formula is based on an economic theory of marginal utility. The somewhat triangular area labeled by f in the graph shows the area of consumer surplus which shows that the equilibrium price in the market was less than what many of the consumers were willing to pay. The theory explains that spending behavior varies with the preferences of individuals.

Visual tutorial on calculating price floors and price ceilings. Price ceilings and price floors.