What is a price floor in the context of market outcomes?

A price floor is a minimum price set by the government for a particular good or service, meaning it cannot be sold for less than this price. This is often done to ensure that producers receive a fair income and to protect them from prices that are too low. For example, if the government sets a price floor for milk at $3 per gallon, stores cannot sell it for less than that amount. While this can help farmers make a living, it can also lead to excess supply because consumers might not want to buy as much milk at the higher price. This situation can create a surplus, where there is more milk available than people want to buy.