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Effect of price regulation on producers

Assume the government regulates price of a good to be no lower than some minimum level. Can such a minimum price make producers as a whole worse off? Describe.
Since a higher price increases revenue and decreases demand, some of the consumer surplus is transferred to producers but some producer revenue is lost since consumers purchase less. The problem along a price floor or minimum price is that it sends the wrong signal to producers. Thinking that more should be produced as the price goes up, producers incur extra cost to produce more than what consumers are willing to purchase at these higher prices. These extra costs can overwhelm gains captured in increased revenues. Thus, unless all producers decrease production, a minimum price can make producers as a whole worse off.

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