btcapital

Yes, a price floor leads to underproduction in a similar way to minimum wages.

If the market efficient price and quantity is $50 and 100 units, and you set a price floor at $30, then producers are going to cut the quantity they supply to (roughly) 60 units because the cost of producing a quantity greater than 60 units is higher than the price floor of $30 and thus would be making losses if they produce any more than 60 units. Underproduction and a deadweight loss.