Wize University Microeconomics Textbook > Efficiency
Producer Surplus
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Producer Surplus
Producer surplus is the amount a producer receives for selling a good minus what they are willing to sell it for (or the cost to make it)
Producer Surplus for Individual Sellers
- In the diagram below, if the actual selling price is currently $20, the producer surplus for the first seller is$8which we find by doing$20minus$12
- For the second seller, the producer surplus is$4
Total Producer Surplus at Equilibrium
In the diagram above the total producer surplus is 15 * (50-20) * 1/2 =
$225
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Example: Producer Surplus
What is the total producer surplus if the current market price of printers is $90
Producer Willingness to Sell (Marginal Cost)
Jake $75
Jamal $80
Jenna $95
Total producer surplus = $25
Producer surplus for Jake = 90 - 75 = 15
Producer surplus for Jamal = 90 - 80 = 10
Producer surplus for Jenna = 0 (because she is not willing to sell the product for 90$)
Total producer surplus = 15 + 10 = $25