If the government sets a price floor for potatoes at $7, what is the likely outcome in the market?

When the government sets a price floor for potatoes at $7, it means that sellers cannot sell potatoes for less than this price. This can lead to a situation where the price is higher than what many consumers are willing to pay, resulting in fewer people buying potatoes. As a consequence, farmers might produce more potatoes because they are guaranteed a higher price, but if consumers are not buying them, there will be excess potatoes left unsold. For example, if the usual market price for potatoes is $5, and now it’s set at $7, some consumers may choose to buy fewer potatoes or look for substitutes. Overall, a price floor can cause a surplus in the market, where supply exceeds demand.