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The opposite of a price ceiling is a price floor, an artificially introduced minimum for the price of a good. Like price ceilings, price floors can be nonbinding (if they are at or below the natural market price) or binding (if they are above the natural price). Price floors are usually put in place to benefit sellers. For example, price floors are sometimes used for agricultural products. The market price can sometimes be so low that farmers cannot make enough money to support themselves. In such cases, the government steps in and sets a price floor, which can cause problems of its own:
Notice that when the price is artificially raised above \(p*\), the quantity supplied exceeds the quantity demanded. Such a situation is called a surplus: farmers produce more crop than buyers want to buy at the new, higher price. What often happens in situations like this is that the government steps in to buy up the surplus. The surplus must then be stored or disposed of, for example by distributing it to food banks or other charities.
