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Producer surplus, or producers' surplus, is the amount that producers benefit by selling at a market price that is higher than the least that they would be willing to sell for; this is roughly equal to profit (since producers are not normally willing to sell at a loss and are normally indifferent to selling at a break-even price).
The producer surplus always decreases, but the consumer surplus may or may not increase; however, the decrease in producer surplus must be greater than the increase, if any, in consumer surplus. Deadweight loss can also be a measure of lost economic efficiency when the socially optimal quantity of a good or a service is not produced.
The maximization of producer surplus can in some cases reduce consumer surplus. [15] Some forms of producer profit maximization are considered anti-competitive practices and are regulated by competition law. [15] Maximization of short-term producer profit can reduce long-term producer profit, which can be exploited by predatory pricing such as ...
Surplus economics is the study of economics based upon the concept that economies operate on the basis of the production of a surplus over basic needs.
The surplus-value produced by prolongation of the working day, I call absolute surplus-value. On the other hand, the surplus-value arising from the curtailment of the necessary labour-time, and from the corresponding alteration in the respective lengths of the two components of the working day, I call relative surplus-value.
In economics, compensating variation (CV) is a measure of utility change introduced by John Hicks (1939). 'Compensating variation' refers to the amount of additional money an agent would need to reach their initial utility after a change in prices, a change in product quality, or the introduction of new products.
The first form of the equation expresses the value resulting from production, focusing on the costs + and the surplus value appropriated in the process of production, . The second form of the equation focuses on the value of production in terms of the values added by the labor performed during the process N L + S L {\displaystyle NL+SL} .
The Ramsey problem, or Ramsey pricing, or Ramsey–Boiteux pricing, is a second-best policy problem concerning what prices a public monopoly should charge for the various products it sells in order to maximize social welfare (the sum of producer and consumer surplus) while earning enough revenue to cover its fixed costs.