Enter the equations for the demand curve and the supply curve into the calculator. The calculator will evaluate the producer surplus, equilibrium price, and equilibrium quantity.
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Producer Surplus Formula
The following formula is used to calculate the consumer surplus.
PS = (MP - M)*QS
- Where PS is the producer surplus
- MP is the market price. (actual sell price.
- M is the minimum price the producer would sell at.
- QS is the quantity sold.
To calculate a producer surplus, subtract the minimum price sold by the producer from the market price, then multiply by the total quantity sold.
Producer Surplus Definition
Producer Surplus is the amount of extra capital a producer earns from an increase in market price due to an increase in demand.
Producer Surplus Example
How to calculate producer surplus?
- First, determine the market price.
This is the actual selling price of the good.
- Next, determine the minimum price.
This is the minimum price the producer could sell the good for.
- Next, determine the quantity sold.
Measure the quantity sold at the market price.
- Finally, calculate the producer surplus.
Using the formula above calculate the producer surplus.
FAQ
A producer surplus is a monetary increase in surplus capital due to increase sales of a good above a minimum sale price.
