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Figure 3.9 The Effects of a Price Floor
A price floor affects both producer and consumer surpluses. Before price controls in the peanut market, consumers pay $500 per ton, and producers supply 20 million tons of peanuts. Consumer surplus is the triangle A + B + C, and producer surplus is D + E + F. When a price floor of $1,000 per ton is put in place, peanut farmers supply 30 million tons of peanuts (point y), but consumers demand only 10 million tons of peanuts (point x), creating an excess supply of 20 million tons of peanuts. Consumer surplus is reduced to A. Producer surplus is now B + D + F, and the net gain to producers is BE. The deadweight loss is C + E.