Read the passage carefully and answer the questions based on the passage:
FLOOR PRICES
For certain goods and services, fall in price below a particular level is not desirable and hence the government sets floors or minimum prices for these goods and services. The government imposed lower limit on the price that may be charged for a particular good or service is called price floor. Most well-known examples of imposition of price floor are agricultural price support programmes and the minimum wage legislation. Through an agricultural price support programme, the government imposes a lower limit on the purchase price for some of the agricultural goods. Similarly, through the minimum wage legislation, the government ensures that the wage rate of the labourers does not fall below a particular level.
The market determined wage rate is $\$$500 per month whereas the minimum wage fixed by the government is $\$$450 per month. As a result of this government intervention.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → The wage rate will remain unaffected.
A price floor (like a minimum wage) only affects the market if it is set above the market-determined (equilibrium) wage.
Here:
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Market wage = $500
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Minimum wage fixed = $450
Since the minimum wage ($450) is below the equilibrium wage ($500), it has no impact on the market. Employers are already paying more than the minimum requirement.