Final answer:
A price floor set above the equilibrium level leads to a decrease in quantity demanded and results in a surplus due to quantity supplied exceeding quantity demanded at the higher price.
Step-by-step explanation:
When a government imposes a price floor above the equilibrium level, it creates a minimum price that is higher than what the market would naturally settle at. This regulation results in a decrease in the quantity demanded because consumers are not willing to buy as much of the product at the higher price. For example, if the price rises from $70 to $80, as indicated from point B to C in Chapter 5, the quantity demanded decreases from 2,800 to 2,600. The excess supply that results from the imposed price floor can lead to a surplus since quantity supplied will generally be more than the quantity demanded at the higher price floor.