What is the effect of a price floor set above the equilibrium price in a competitive market?

A price floor is a minimum price set by the government for a good or service, and when it is set above the equilibrium price, it can lead to some important effects. The equilibrium price is where the supply and demand for a product are balanced, meaning that the quantity supplied equals the quantity demanded. When a price floor is established above this point, it causes the price to rise, which can reduce the quantity demanded by consumers. For example, if the equilibrium price for a loaf of bread is $2, but a price floor is set at $3, fewer people may want to buy bread at this higher price, leading to a surplus of bread in the market. This surplus happens because producers are willing to supply more bread at the higher price, but consumers are not buying as much, resulting in wasted resources and potential economic inefficiencies.