transactions they would both be willing to make.

A second change from the price ceiling is that some of the producer surplus is transferred to consumers. After

the price ceiling is imposed, the new consumer surplus is T + V, while the new producer surplus is X. In other

words, the price ceiling transfers the area of surplus (V) from producers to consumers. Note that the gain to

consumers is less than the loss to producers, which is just another way of seeing the deadweight loss.

FIGURE 3.24 Efficiency and Price Floors and Ceilings (a) The original equilibrium price is $600 with a quantity of

20,000. Consumer surplus is T + U, and producer surplus is V + W + X. A price ceiling is imposed at $400, so firms in

the market now produce only a quantity of 15,000. As a result, the new consumer surplus is T + V, while the new

producer surplus is X. (b) The original equilibrium is $8 at a quantity of 1,800. Consumer surplus is G + H + J, and
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