00:01
So here we're talking about price controls, right? and we have a market quantity and price.
00:06
We have a demand curve in red.
00:08
Wonderful.
00:09
And we have a supply curve in blue.
00:11
Wonderful.
00:12
And we have a price control and our price control is up here at 575.
00:18
Right.
00:19
That is our floor.
00:22
So this means that the equilibrium in the presence of this price floor is going to be right here.
00:28
Right.
00:28
People are simply not willing to buy very much.
00:32
The deadweight loss is going to be this triangle here.
00:35
So a the deadweight loss is equal to this green area.
00:39
Right.
00:39
It's the joint producer and consumer surplus on the goods that are not produced.
00:46
And you see that goes from 375 and 20 ,000 to 40 ,000.
00:54
So this is a triangle.
00:56
So it's a half times the base times the height.
01:00
The base of the triangle would be 20 ,000.
01:04
And the height of the triangle is 2.
01:07
So it's simply equal to 20 ,000.
01:12
Now for b, the transfer of consumer surplus is kind of difficult.
01:18
Well, imagine that we were at equilibrium.
01:20
Right.
01:21
The original consumer surplus would have been this area.
01:24
Right.
01:25
This is the original consumer surplus.
01:29
Now, the new producer surplus becomes this area here.
01:34
Right.
01:35
At the new at the price floor.
01:40
That's the new producer surplus.
01:42
And you can see that this area here got transferred from the original consumer surplus to the new producer surplus.
01:50
So the transfer is equal to this blue area.
01:56
The amount that got taken from consumers and given to producers and surplus...