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- The producer surplus is the difference between the price received for a product and the marginal cost to produce it. Because marginal cost is low for the first units of the good produced, the producer gains the most from producing these units to sell at the market price.
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What is the difference between consumer surplus and producer surplus?
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Is it possible to produce greater consumer surplus without reducing producer surplus?
What is total economic surplus?
3 days ago · The producer surplus is the difference between the price received for a product and the marginal cost to produce it. Because marginal cost is low for the first units...
Producer surplus is the gap between the price for which producers are willing to sell a product—based on their costs—and the market equilibrium price. Social surplus is the sum of consumer surplus and producer surplus. Total surplus is larger at the equilibrium quantity and price than it will be at any other quantity and price.
- You are right over the short run, apple can enforce higher price on their products but over the long run the price will eventually shift to market...
- My interpretation would be that a voluntary transaction results when market price is at a point where at least one consumer is willing to pay (i.e....
- It would be better to say the sum. The sum of consumer and producer surplus can increase when there is deadweight loss. It is possible for either t...
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- No. It isn't. Producer surplus, for instance, can increase by far more than deadweight loss. Of course, that would mean that consumer surplus is de...
It is the sum of consumer surplus and producer surplus. Consumer surplus is the difference between willingness to pay for a good and the price that consumers actually pay for it. Each price along a demand curve also represents a consumer's marginal benefit of each unit of consumption.
Explore the concepts of supply and demand, opportunity cost, and producer surplus in the context of a berry farm, learning how changes in quantity produced affects the price needed to incentivize producers, and how producers benefit when the market price is higher than their opportunity cost.
- 8 min
- Sal Khan
- You use Integration, which Sal teaches in the Calculus playlist.
- Not quite. It's not profit (the difference between price and cost), but rather the difference between what the producer actually receives (price) a...
- Yes, as a higher quantity supplied is reached, investments could allow for a lower marginal price for additional unit. This would lead to a downwar...
- Producer surplus is the benefit that firms receive by getting more for their product than the minimum they were willing to accept. Let's use an exa...
- *IF* the sellers wish to sell at 1000 lbs, they will get $1.00 *BUT* in reality they will sell 4000 lbs because that is where the equilibrium betwe...
- The difference is that the consumer surplus is the amount of money that the consumer would have if they bought the product when it was not on deman...
- Economies of scale do hold true, but so do diseconomies of scale, where after a point, increasing production increases costs, because you have to o...
- He's just a Sal, Sals make mistakes. His brain was like "year", but his mouth was all like "well, I'm just gonna say week and see what happens".
This measurement is the rationale for two important concepts: consumer surplus and producer surplus, which together make up economic (or social) surplus—the gain to society from the transaction. This is the subject of this module. Sale Image by Tim Parkinson, CC-BY.
This measurement is the rationale for two important concepts: consumer surplus and producer surplus, which together make up economic (or social) surplus—the gain to society from the transaction. This is the subject of this module. Sale Image by Tim Parkinson, CC-BY.
Figure 1. Consumer and Producer Surplus. The somewhat triangular area labeled by F in the graph shows the area of consumer surplus, which shows that the equilibrium price in the market was less than what many of the consumers were willing to pay.
