What is consumer surplus and producer surplus?
Create a diagram to explain your answer. On the same diagram, show what happens if a limit is imposed on the amount of a good that can be sold in the marketplace (e.g., shortages of rubber due to government controls such as tariffs on imports or import quotas, or due to diseased rubber trees, that result in a limited number of wiper blades for cars), and then explain if the societal combination of the consumer and producer surplus is more or less than if the limit on the quantity had not occurred. Would losses to both producer and consumer surpluses occur? Why or why not?
Hint: You may need to refer to the term deadweight loss or welfare loss triangle in your answer.