# What are the (immediate) effects of changing a good's price on consumer and producer surplus?

Basically, I'm trying to understand why the total surplus is maximized at the equilibrium and what happens if the price isn't at the equilibrium.

Say the price of a good is the equilibrium price. Now make it more expensive. I know that after a while the price will adjust to the equilibrium again, but what will happen before that? I'm trying to use an example but there are things I can't fill in:

The equilibrium price of the good is \$20 and the equilibrium quantity is 20. Given a straight demand and supply curve and a maximum buyer's imposed value of \$40, the consumer surplus is $\frac{1}{2}(40-20)\cdot20=200$ and the producer surplus is $\frac{1}{2}(20-0)\cdot20=200$.

Now make the good \$30. The quantity demanded falls to 15 and the quantity supplied rises to 25. Now, the consumer's surplus is the triangle I marked in blue,$\frac{1}{2}(40-30)\cdot15=75$(because only 15 items will be sold), but what about the producer's surplus? Is this the triangle I marked in red? I think not, because that seems to imply that the price is only \$10. But if not, what is the producer's surplus, and why?

Thanks in advance and my apologies for the possibly confusing phrasing.

• This question boils down to "what is producer's surplus?" which, without the homework element is a much better question in my opinion. – Giskard Apr 18 '18 at 9:38
• Maybe you could think about who ends up with the rectangular chunk between p=10 and p=30. – Dan Apr 18 '18 at 11:12
• @Dan I don't really know. If the price rise were due to a tax, that area would be the tax revenue, but I don't know what the area means when there is just a price change not due to taxes. – Sudera Apr 18 '18 at 11:20
• @Sudera It seems like you're close. If the price rise were due to a tax, that chunk of money would go to the government. If it's just because the producer put the price up, where does that money go to? – Dan Apr 18 '18 at 11:26
• @Dan Oh I guess it just goes to the producer then. Thanks for your help! – Sudera Apr 18 '18 at 11:45