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.
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.
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