Calculate consumer surplus, producer surplus, total economic surplus, equilibrium price and quantity, taxes, subsidies, and price controls.
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Economic Surplus Formula
The following formula is used to calculate the economic surplus:
ES = CS + PS
Variables:
- ES is the economic surplus ($)
- CS is the consumer surplus ($)
- PS is the producer surplus ($)
To calculate the economic surplus, add the consumer surplus to the producer surplus.
What is Economic Surplus?
Economic surplus, also known as total welfare or Marshallian surplus, is a measure of the economic benefit that is derived by consumers and producers as a result of participating in the market. Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay, while producer surplus is the difference between what producers are willing to accept for a good or service and the actual price they receive. The sum of these two surpluses reflects the total gains from trade in the market.
How to Calculate Economic Surplus?
The following steps outline how to calculate the Economic Surplus:
- First, determine the consumer surplus (CS) in dollars.
- Next, determine the producer surplus (PS) in dollars.
- Use the formula from above = ES = CS + PS.
- Finally, calculate the Economic Surplus (ES) in dollars.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem:
Use the following variables as an example problem to test your knowledge.
Consumer Surplus (CS) = $150
Producer Surplus (PS) = $200
