all. Quality is also likely to deteriorate.

Access for free at openstax.org
3.4 • Price Ceilings and Price Floors 73

Price Floors

A price floor is the lowest price that one can legally pay for some good or service. Perhaps the best-known

example of a price floor is the minimum wage, which is based on the view that someone working full time

should be able to afford a basic standard of living. The federal minimum wage in 2022 was $7.25 per hour,

although some states and localities have a higher minimum wage. The federal minimum wage yields an annual

income for a single person of $15,080, which is slightly higher than the Federal poverty line of $11,880.

Congress periodically raises the federal minimum wage as the cost of living rises. As of March 2022, the most

recent adjustment occurred in 2009, when the federal minimum wage was raised from $6.55 to $7.25.

Price floors are sometimes called “price supports,” because they support a price by preventing it from falling
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