In a perfectly competitive market, if a price floor is established above the market equilibrium price, it will lead to a surplus in the market and firms will be unable to sell all their products.

In a perfectly competitive market, the equilibrium price is where the amount of goods supplied equals the amount demanded. When a price floor is set above this equilibrium price, it means that the minimum price for a product is higher than what consumers are willing to pay. As a result, suppliers will produce more goods because they can sell them at this higher price, but consumers will buy less because the price is too high for them. This mismatch creates a surplus, where there are more products available than people want to buy. For example, if the equilibrium price of apples is $1 per pound but a price floor is set at $1.