In a perfectly competitive market for potatoes, a sudden increase in consumer preference for organic potatoes leads to a rise in demand. How would this scenario affect the market equilibrium, and what could be the potential consequences if the government decides to impose a price floor on organic potatoes?

In a perfectly competitive market for potatoes, an increase in consumer preference for organic potatoes means more people want to buy them. This higher demand will push the price of organic potatoes up because sellers can charge more when many buyers are interested. As the price rises, suppliers will also be encouraged to produce more organic potatoes to take advantage of the higher prices, moving the market toward a new equilibrium where the quantity supplied matches the quantity demanded at this new price. If the government imposes a price floor on organic potatoes, it sets a minimum price that sellers cannot go below. This could lead to a surplus, where the quantity of organic potatoes supplied exceeds the quantity demanded at that price.