Non Binding Price Floor. If the price floor is above the equilibrium price. Under the market equilibrium price.
At the price P the consumers demand for the commodity equals the producers supply of the commodity. Explanation- In non-binding price floor price is lower than equilibrium market price. It will be non-binding A price floor must be higher than P in order for it to have any effect.
The price and the quantity sold in the community without a non-binding price floor will be the same as the price and quantity in the community with a non-binding price floor.
Consider the figure below. Considering this what happens when a binding price floor is removed. Note that the price ceiling is above the equilibrium price so that anything price BELOW the ceiling is feasible. The government establishes a price floor of PF.
