What is the primary consequence of a firm setting prices above the equilibrium level?

When a firm sets prices above the equilibrium level, it creates a situation where fewer consumers are willing to buy the product. This leads to a decrease in the quantity sold, as some customers who would have purchased the item at a lower price can no longer afford it. The result is a loss of economic efficiency known as deadweight loss, which means that the total benefits to society from the product are reduced. For example, if a company sells a toy for $20 instead of the equilibrium price of $15, some parents might decide not to buy it, leading to fewer toys sold and less overall happiness for both the company and the customers. Therefore, setting prices too high not only hurts sales but also decreases the overall welfare of the market.