To be effective, the floor price should be determined

Option 1: Lesser than the market determined price -> If set below market price, it becomes non-binding and ineffective.

Option 2: More than the market determined price -> This makes the floor price binding and effective in preventing prices from falling below the set minimum.

Option 3: Equal to the market determined price -> No constraint is imposed, making it ineffective.

Option 4: Either lesser or more than the market determined price but not equal to it -> Incorrect because a floor price below market price won't be effective.

Hence, Option 2: More than the market determined price -> A price floor is a minimum price set by authorities to prevent prices from falling too low. For it to be effective (binding), it must be set above the equilibrium market price. If set below the market price, suppliers would naturally sell at the higher market price anyway, making the floor irrelevant. When set above market price, it creates a surplus as quantity supplied exceeds quantity demanded at that price level, achieving the intended intervention effect. -> correct