When Government fix the minimum price of any commodity this move of government is known by:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Floor Price.
When the government fixes the minimum price for a commodity above the equilibrium price, it is known as a Floor Price (or Minimum Support Price in agriculture).
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It ensures producers receive a minimum income, even if the market price falls.
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It is often used to protect farmers or small-scale producers.
Why other options are incorrect:
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Price Ceiling: Maximum price fixed below equilibrium to protect consumers (e.g., rent control).
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Price Discrimination: Charging different prices from different consumers for the same product.
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Price Rigidity: Prices don’t change easily even when supply or demand changes.