Today, we will discuss price floors, which are government-imposed minimum prices for goods. Can someone tell me why we might want to have a price floor?

Exactly! A price floor can help prevent prices from falling too low, which could hurt producers’ incomes. Now, can anyone explain what might happen if a price floor is set above the market equilibrium?

Correct! When the price is set too high, suppliers will produce more than consumers are willing to buy, creating a surplus.

Great question! The government may intervene by buying the excess supply or implementing rationing to distribute the goods fairly.

To recap, a price floor leads to excess supply when it is set above the equilibrium price.

Let’s talk about how price floors are used in the real world. Can anyone think of examples where price floors are applied?

Exactly! Price floors are often seen in agriculture to support farmers. What happens when these price floors are implemented?

Yes, and sometimes this leads to government buying up the excess. Why might this cause problems for consumers though?

Right! Price floors can lead to higher prices for consumers and even create black markets where goods are sold illegally at lower prices.

In summary, while supporting producers is important, we must consider the broader implications of price floors on consumers and the market.

Now let's discuss minimum wage legislation. How does this relate to our discussion on price floors?

Correct! And when the minimum wage is set above equilibrium, what can we expect to see in the labor market?

Exactly! This can lead to unemployment because companies may not be able to afford to hire as many workers.

Right again! It’s important to strike a balance to protect both workers and the job market.

In summary, minimum wage can serve to protect workers but must be implemented carefully to avoid unintended job losses.