Change in consumer and producer surplus from price controls
- The loss is equal to area B + C.
- The change in surplus = (A - B) + (-A - C) = -B - C
- The deadweight loss is inefficiency of price controls or loss of the producer surplus exceeds the gain from consumer surplus.
- Consumers can experience net loss in consumer surplus when demand is inelastic enough
Effect of Price Controls When the Demand Is Inelastic Price Controls and Natural Gas Shortages