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.
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