Enter the total consumer surplus and producer surplus into the calculator to determine the total surplus.
Total Surplus Formula
The following formula is used to calculate a total surplus.
TS = CS + PS
- Where TS is the total surplus ($)
- CS is the consumer surplus ($)
- PS is the producer surplus ($)
Total Surplus Definition
What is a total surplus? A total surplus is a term used in finance to describe the sum of the consumer surplus and producer surplus. The consumer surplus and producer surplus can be calculated using the calculators linked above.
How to calculate total surplus?
- First, determine the consumer surplus.
This is the area above the market price and below the demand curve. For this example, the consumer surplus is $25.00.
- Next, determine the producer surplus.
This is the area below the market price but above the supply curve. For this example, the producer surplus is $15.00.
- Finally, calculate the total surplus.
Using the formula, the total surplus is found to be $25.00 + $15.00 = $40.00.
About Total Surplus
Can total surplus be negative? A total surplus can be negative if the market price is so low that the cost to produce the part makes the producer surplus negative.
How to increase total surplus? The best way to increase a total surplus is to decrease the slopes of the supply and demand curves. This will lead to larger areas under the curves.
When is total surplus maximized? A total surplus is maximized at market equilibrium.