What is the primary consequence of setting a price floor above the market equilibrium?

Setting a price floor above the market equilibrium price creates a situation where the minimum price is higher than what would naturally occur in a free market. When this happens, sellers are encouraged to supply more of the good at the higher price, while buyers are deterred from purchasing as much due to the increased cost. This leads to an excess supply in the market, commonly referred to as a surplus.

In essence, the supply of the good exceeds the demand at that price, resulting in unsold inventory. This is because consumers will not buy as much of the product when it is priced above their willingness to pay, leading to a mismatch between what sellers want to sell and what consumers want to buy at that price level. Therefore, the primary consequence of establishing a price floor above the equilibrium price is the creation of a surplus in the market.