Step 5. Recall, also, that producer surplus is another name for profit—it is the income producers get above the
cost of production, which is shown by the supply curve here. In this case, the producer surplus with trade is the
area of the triangle formed by the points Ptrade, C, and D.

Step 6. Suppose that the barriers to trade are imposed, imports are excluded, and the price rises to PNoTrade. Look
what happens to producer surplus and consumer surplus. At the higher price, the domestic quantity supplied

increases from Qs to Q at point E. Because producers are selling more quantity at a higher price, the producer
surplus increases to the area of the triangle PNoTrade, E, and D.

Step 7. Compare the areas of the two triangles and you will see the increase in the producer surplus.

Step 8. Examine the consumer surplus. Consumers are now paying a higher price to get a lower quantity (Q
instead of Qd). Their consumer surplus shrinks to the area of the triangle PNoTrade, E, and B.
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