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Total economic surplus is the sum of all producer and consumer surplus in a particular market. Total Surplus = Total Consumer Surplus + Total Producer Surplus Graphing and Calculating Total Surplus
Consumer surplus is calculated by finding the difference between the amount a consumer is willing to pay for a product and the actual price they pay. To find the total consumer surplus, you sum up these differences for all units sold.
Hence, the total surplus = the total area for the consumer surplus + the total area for the producer surplus. Consumer surplus = the area above the market price and below the demand curve, while producer surplus = the area below the market price but above the supply curve.
This video goes over the process of calculating total surplus with a few examples. The key point to remember is that total surplus is the sum of producer and consumer surplus. The video...
The sum of consumer surplus and producer surplus is social surplus, also referred to as economic surplus or total surplus. In Figure 3.9 we show social surplus as the area F + G. Social surplus is larger at equilibrium quantity and price than it would be at any other quantity.
Formula to calculate total surplus. Consumer is the difference between the maximum amount a consumer is willing to pay and the actual amount they pay. Producer surplus is the difference between the amount the producer is willing to supply goods for and the actual amount received by him when he makes the trade. Example:
The new value created by the transactions, i.e. the net gain to society, is the area between the supply curve and the demand curve, that is, the sum of producer surplus and consumer surplus. This sum is called social surplus, also referred to as economic surplus or total surplus.