In analyzing the market for potatoes in a perfectly competitive industry, which of the following sequences correctly outlines the steps a student should take to address a long response question involving a price floor?

When answering a long response question about a price floor in the potato market, start by explaining what a price floor is. A price floor is a minimum price set by the government that must be paid for a good, like potatoes, which can lead to excess supply if it is above the market equilibrium price. Next, illustrate how this affects the market: producers may want to supply more potatoes because of the higher price, but consumers may buy less, leading to a surplus. For example, if the price floor for potatoes is set at $3 per pound while the equilibrium price is $2, farmers produce more potatoes than consumers are willing to buy, resulting in unsold potatoes. Finally, discuss the potential consequences of this surplus, such as wasted resources or government intervention to buy the excess supply.