Consumer, Producer, and Social Surplus - Explained
What is a Consumer Surplus, Producer Surplus, and Social Surplus?
Written by J. Mance Gordon
Updated at April 23rd, 2024
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What is Consumer Surplus?
A consumer surplus is the value that a consumer receives when purchasing an item above and beyond the value the consumer was required to provide to obtain the good or service.
What is a Producer Surplus?
A producer surplus is the additional value the a producer receives from selling its goods beyond the cost of that good. In summary, it is the difference between the price paid and the total cost of the good or service.
What is a Social Surplus?
Social surplus, also known as total surplus, is the sum of both consumer and producer surplus.
Related Topics
- Self Interest
- Cost-Benefit Analysis
- Enlightened Self-Interest
- Fisher's Separation Theorem
- Ratchet Effect
- Total Utility (Economics)
- Efficiency Principle
- Expected Utility
- Subjective Theory of Value
- Positional Goods
- Utilitarianism
- Indifference Curve
- Time Preference Theory of Interest
- Incentives
- Marginal Benefit
- Diminishing Marginal Utility
- Sunk Costs
- Production Possibilities Frontier
- Law of Diminishing Returns
- Economic Efficiency
- Efficiency Theory
- Productive Efficiency
- Capacity Utilization Rate
- Allocative Efficiency
- Pareto Efficient
- Comparative Advantage
- Criticisms of the Economic Approach
- Behavioral Economics
- Normative Economics
- Positive Economics
- Invisible Hand
- Sunk cost