Price floors are today one of the main causes of surplus and inefficiency in the market and economy of our world. A price floor is the lowest legal price at which a good or service can be sold, while a market surplus occurs when there is oversupply and the quantity supplied is greater than the quantity demanded. It is set by the government to prevent prices from being too low and can only be effective if the price is set above the equilibrium price. The government may choose to do this to support the industry because it believes the good is too important, or to dissuade consumers from purchasing a certain good. In this article, the issue of the price floor and its negative effects on society as a whole will be discussed. Although floor prices are generally set on goods and services to guarantee producers a higher income; an increase in prices generally means a decrease in demand and therefore a decrease in the overall income of producers as well as the fact that producers will have to pay most of the tax burden. This is the case if the demand for the good is elastic. However, another reason for the price of a good to increase is that the government is trying to reduce consumption of a certain good for health or environmental reasons (e.g. cigarettes and tobacco). But these goods are inelastic, so an increase in price would only slightly reduce demand. What the government does is increase the production of these goods, but the demand remains constant because an increase in price will not incentivize these particular consumers to increase their consumption. So how exactly does this help anyone? It’s simple, it’s not. If these goods are overproduced, then they cannot be disposed of normally (in dumpsters or given...... middle of paper ...... to people so they don't overproduce. Don't remember that if the price floor would be removed and eliminated then there would be no need to waste this money this is another example of cost inefficiency Once the government is paying a business/industry to do so; produce, suddenly all the other business owners start showing up hoping to get paid. This cost will become too high for the government to continue paying and is usually fixed by increasing the tax on it. income and using the extra tax revenue to pay off the surplus or reduce it to buy it all and give it to other countries. For example, the US government used to buy all the surplus grain and give it away. give to African consumers, and as nice as this act may have seemed, it destroys the demand of African farmers and drives them into bankruptcy.