Hi all,I have to write an article about price floorsother than the obvious price floors impact, what can I talk about?thanks
How about talking about why and how it's used in the agriculture market. Price floors are used on almost all farm products, right?
This Site Might Help You. RE: Price Floors? Hi all, I have to write an article about price floors other than the obvious price floors impact, what can I talk about? thanks
I would talk about minimum wage (fair labor standards act). This is also an example of a price floor which lifts wage up and stops it from going any lower. Much like the floor below your feet, lifts you up and stops you from going any lower. Many young people are in favor of minimum wage legislation and minimum wage increases. Note how some states stick with the Federal Minimum, but other states employ their own minimum which is above the Federal level. You could highlight those firms that are most impacted by minimum wage increases. You could note who are the main folks working for minimum wage. Some would argue that if minimum wage becomes too comfortable or livable then where is the motivation to develop skills and get off the minimum wage roller coaster. Etc.
Milk is once such example of price floors. For the past 20+ years, the USDA has mandated--as have many states--a minimum price for liquid milk. This floor has had a major impact in prices, supply and demand. The price floors for milk have enabled a steady production supply of milk when the dairy farmers were going out of business left and right. Before the floors, dairy farmers had to compete with each other and the actual production price for each gallon of milk was rising faster than the price. In 2007, many manufacturers are setting a MAP price floor. This Minimum Advertised Price floor is artificial, but very hard to overcome. Each manufacturer normally pays a part of the cost to reduce prices. Sometimes by a set amount, sometimes by a negotiated amount. This protects the retailer's margins, but if the retailer breaks the MAP price, the manufacturer will not pay any money to the ad. This artifical price floor prevents retailers from going below a certain point and all consumers are impacted by this floor. The artifical floor also slows demand and will drive consumers to less expensive brands. The cycle is quite confusing and one wonders if the manufacturers are in business to sell products or protect their price image. I hope this gives you a better insight. Feel free to email me for more information.
