Define price floor and its impact on the market.

Define price floor and its impact on the market.

A price floor is a government-imposed minimum price set above the equilibrium price in a market. Its impact on the market is that it creates a surplus of the product, as the quantity supplied exceeds the quantity demanded at the higher price. This surplus can lead to inefficiency and potential waste, as producers are unable to sell all of their goods. Additionally, price floors can discourage innovation and competition, as they prevent prices from adjusting naturally based on market forces.