What is the effect of a price floor on economic welfare in a market where the equilibrium price is lower than the price floor?

A price floor is a minimum price set by the government that must be paid for a good or service. When the equilibrium price, which is the price that would naturally occur in a free market, is lower than the price floor, it means that the price floor creates a situation where the price cannot drop to the equilibrium level. This can lead to a surplus of goods because suppliers want to produce more at the higher price, but consumers may not buy as much since it is more expensive. For example, if the equilibrium price for milk is $2 per gallon but the price floor is set at $3, farmers may produce more milk than people are willing to buy at that price, resulting in wasted resources and unhappy consumers. Overall, this situation can reduce economic welfare because it creates inefficiencies in the market, leading to lost benefits for both consumers and producers.