Enter the consumer surplus and producer surplus into the calculator to determine the social surplus. This calculator helps to evaluate the total economic benefit to society from a market transaction.
Social Surplus Formula
The following formula is used to calculate the social surplus.
SS = CS + PS
Variables:
- SS is the social surplus ($)
- CS is the consumer surplus ($)
- PS is the producer surplus ($)
To calculate the social surplus, add the consumer surplus to the producer surplus.
What is Social Surplus?
Social surplus, also known as total welfare or total surplus, is the sum of consumer surplus and producer surplus. It represents the total benefits that consumers and producers receive from participating in a 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. Social surplus is used as an indicator of the overall economic welfare and efficiency of a market.
How to Calculate Social Surplus?
The following steps outline how to calculate the Social Surplus.
- First, determine the consumer surplus (CS) in dollars.
- Next, determine the producer surplus (PS) in dollars.
- Next, gather the formula from above = SS = CS + PS.
- Finally, calculate the Social Surplus (SS) 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) = $500
producer surplus (PS) = $300
