Which of the following is incorrect with reference to the imposition of a price floor for a good?

Option 1 -> Correct statement - Price floor is indeed a lower limit or minimum price set by government.

Option 2 -> Incorrect statement - Price floor must be set ABOVE (not below) the market equilibrium price to be effective and binding.

Option 3 -> Correct statement - When price is artificially kept high, quantity supplied exceeds quantity demanded, creating excess supply.

Option 4 -> Correct statement - Price floors are commonly called Minimum Support Price (MSP), especially in agricultural markets.

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Hence, Option 2 -> A price floor is only effective when set ABOVE the market-determined equilibrium price. If set below the equilibrium, it becomes non-binding as market forces would naturally push prices above the floor anyway. For example, if market price is ₹100 and government sets floor at ₹80, it has no impact. But if floor is set at ₹120, it creates binding constraints leading to excess supply as producers want to supply more at higher prices while consumers demand less. -> correct