What is likely to occur in a market when a price floor is implemented?

Implementing a price floor in a market typically results in a surplus, which occurs when the price set by the government is above the equilibrium price. The equilibrium price is where the quantity demanded by consumers equals the quantity supplied by producers. When a price floor is in place, suppliers are incentivized to produce more goods because they can sell at a higher price. However, consumers may not be willing or able to buy as much at this elevated price, leading to a situation where the quantity supplied exceeds the quantity demanded. This mismatch generates a surplus of goods in the market.

In contrast, a market clearing efficiently would imply that supply equals demand, which wouldn’t be the case with a price floor. The option that suggests all goods are sold quickly contradicts the surplus created by a price floor, as excess goods remain unsold. Lastly, consumers paying less than the equilibrium price also does not align with the implementation of a price floor, as prices are set higher than the equilibrium level, hence driving prices up rather than down. Therefore, the correct understanding is that a price floor causes a surplus due to increased supply without a corresponding increase in demand.