Change in consumer and producer surplus from price controls, Microeconomics

Change in consumer and  producer surplus from price controls

* Observations:

- 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.

* Observation

- Consumers can experience net loss in consumer surplus when demand is inelastic enough

Effect of Price Controls When the Demand Is Inelastic

965_effect of price control.png

Price Controls and Natural Gas Shortages

1055_effect of price control1.png

Posted Date: 10/12/2012 6:01:47 AM | Location : United States







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