2019 · Q88
Which one of the following is an example of a price floor?
General KnowledgeStatic General Awareness
- AMinimum Support Price (MSP) for Jowar in India
- BSubsidy given to farmers to buy fertilizers
- CPrice paid by people to buy goods from ration shops
- DMaximum Retail Price (MRP) printed on the covers/packets of goods sold in India
Explanation
A price floor is a government-imposed minimum price above which a good must sell; India's Minimum Support Price for crops such as jowar guarantees farmers this floor price — the textbook example (NCERT Class 12, Market Equilibrium). Maximum Retail Price is a maximum price (a ceiling), a fertilizer subsidy is a fiscal transfer, and ration-shop prices are subsidized issue prices. Hence the Minimum Support Price for Jowar.