traditional rural way of life or because of industry's lobbying power of the agro-business.
74 3 • Demand and Supply

FIGURE 3.22 European Wheat Prices: A Price Floor Example The intersection of demand (D) and supply (S) would
be at the equilibrium point E0. However, a price floor set at Pf holds the price above E0 and prevents it from falling.
The result of the price floor is that the quantity supplied Qs exceeds the quantity demanded Qd. There is excess

supply, also called a surplus.

3.5 Demand, Supply, and Efficiency

LEARNING OBJECTIVES

By the end of this section, you will be able to:

• Contrast consumer surplus, producer surplus, and social surplus

• Explain why price floors and price ceilings can be inefficient

• Analyze demand and supply as a social adjustment mechanism

The familiar demand and supply diagram holds within it the concept of economic efficiency. One typical way
{"moddate": "2022-12-07T14:23:05-06:00", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_name": "Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "total_pages": 597, "creationdate": "2022-12-07T14:15:44-06:00", "file_type": ".pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "batch_upload": true, "creator": "PDFMiner", "uploaded_via": "batch_uploader", "producer": "Prince 14.2 (www.princexml.com)", "file_size_mb": 26.99, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e"}