In the context of the standard supply and demand diagram, is there any economic interpretation of a triangle showing the surplus/excess supply that results from a price floor set above the market equilibrium price?

An example can be found in the light blue shaded triangle from the Wikipedia page for price floors:

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As far as I can make out, surplus is only the difference in quantity, but I'm wondering whether the shaded area could represent some measure of value for the surplus by taking price into account.


1 Answer 1


You are right to wonder. The shaded area has no interpretation here, this is a bad drawing.

Usually these shaded area denote something like consumer surplus/producer surplus/welfare/deadweight loss, but in this context the area itself does not (directly) correspond to any of these quantities.

Now where if instead of the point at the intersection at the dashed green line and the blue line, the third point of the triangle were the point at the intersection at the dashed red line and the blue line, then the area of the new triangle would measure deadweight loss (with the questionable additional assumption of efficient allocation).


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