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    Course Introduction
    Course Syllabus
    Unit 1: Introduction to Economics
    1.1: Economics Unveiled: A Beginner's Journey
    Scarce Resources
    Introduction to Microeconomics
    Specialization
    Why the Division of Labor Increases Production
    Microeconomics versus Macroeconomics
    1.2: Scarcity, Choices, Incentives, and Opportunity Costs
    Scarcity and Choice
    Opportunity Cost and Trade-offs
    How Individuals Make Choices Based on Their Budget Constraints
    1.3: Economic Decision-Making: Budget Constraint and Thinking in Marginal Terms
    Budget Contraints
    Budget Line
    Marginal Thinking and the Sunk Cost Fallacy
    1.4: The Economic Toolbox: Interpreting Diagrams and Equations
    Mathematics in Economics
    Graph Review
    1.5: Economic Models
    Models and Theories
    Ceteris Paribus
    The Production Possibilities Frontier and Social Choices
    More on the Production Possibilities Frontier
    Absolute and Comparative Advantage
    Increasing Opportunity Cost
    Allocative Efficiency and Marginal Benefit
    Circular Flow Model of Income and Expenditures
    Economics, the Economy, and the Biosphere
    Unit 1 Assessment
    Unit 1 Assessment
    Unit 2: Supply and Demand
    2.1: Introduction to Demand and Supply
    Introduction to Demand and Supply
    2.2: Demand for Goods and Services
    Demand for Goods and Services
    Law of Demand
    Change in Demand vs. Change in Quantity Demanded
    Changes in Income, Population, or Preferences
    Shifts in Demand and Supply for Goods and Services
    Normal and Inferior Goods
    Price of Related Products and Demand
    Change in Expected Future Prices and Demand
    Summing Up Factors That Change Demand
    2.3: Supply of Goods and Services
    Supply of Goods and Services
    Law of Supply
    Supply
    Summing Up Factors That Change Supply
    2.4: Market Equilibrium and Demand and Supply Changes
    Market Equilibrium
    Changes in Equilibrium Price and Quantity: The Four-Step Process
    Changes in Market Equilibrium
    Self-Check Questions
    2.5: Application of Market Equilibrium to the Analysis of the Labor Market and the Financial Markets
    Demand and Supply at Work in Labor Markets
    Labor Market Equilibrium
    The Moral Economy of the Great Resignation
    Introduction to Financial Markets
    Introduction to Interest
    How Businesses Raise Financial Capital
    How Households Supply Financial Capital
    Unit 2 Assessment
    Unit 2 Assessment
    Unit 3: Elasticity and its Applications
    3.1: The Concept of Elasticity
    Introduction to Elasticity
    3.2: Elasticities of Demand
    Price Elasticity of Demand
    Elasticity of Demand
    Income Elasticity of Demand
    Cross Elasticity of Demand
    Polar Cases of Elasticity and Constant Elasticity
    3.3: Elasticity of Supply and Its Applications
    Elasticity of Supply
    Price Elasticity of Supply Determinants
    Is the Elasticity the Slope?
    3.4: Elasticity, Revenues, and Pricing Decisions
    Elasticity and Pricing
    Total Revenue and Elasticity
    3.5: Elasticity and Its Applications
    Taxes and Perfectly Elastic and Inelastic Demand
    Elasticity in Areas Other Than Price
    Elasticity Review
    Unit 3 Assessment
    Unit 3 Assessment
    Unit 4: Markets and Maximizing Individual Behavior
    4.1: Maximizing in the Market Place: Consumer Surplus, Producer Surplus and Social Surplus
    Demand, Supply, and Efficiency
    Demand Curve as Marginal Benefit Curve
    Consumer Surplus
    How Much to Produce? Marginal Revenue and Marginal Costs
    What Is Producer Surplus?
    Equilibrium, Allocative Efficiency, and Total Surplus
    4.2: Price Controls and Efficiency
    Demand, Supply, and Efficiency
    Rent Control, Deadweight Loss, Minimum Wage, and Price Floors
    Why Do Governments Enact Price Controls?
    4.3: When Markets Fail: Externalities and Introduction to Public Goods
    Introduction to Market Failure
    Externalities
    Positive Externalities of Innovation
    Positive Externalities
    How Governments Encourage Innovation
    Negative Externalities
    The Economics of Pollution
    Taxes for Factoring in Negative Externalities
    The Trade-off between Economic Output and Environmental Protection
    Public Goods
    4.4: Poverty, Income Inequality, and Discrimination in the Labor Market
    Introduction to Poverty and Economic Inequality
    Speaking of Poverty Differently
    Drawing the Poverty Line
    The Poverty Trap
    Why Is It So Hard to Escape Poverty?
    Income Inequality: Measurement and Causes
    Is Inequality Inevitable?
    Employment Discrimination
    Unit 4 Assessment
    Unit 4 Assessment
    Unit 5: Introduction to Consumer Choice
    5.1: The Rational Consumer, Consumer Preferences, and Consumer Choice
    Introduction to Consumer Choices
    Diminishing Marginal Utility
    Consumption Choices
    Equalizing Marginal Utility per Dollar Spent
    Budget Line
    How Changes in Income and Prices Affect Consumption Choices
    Self-Check Questions
    5.2: Indifference Curves
    Indifference Curves and Marginal Rate of Substitution
    Types of Indifference Curves
    Indifference Curve Analysis
    5.3: Building the Demand Curve from an Indifference Curve Map
    Deriving Demand Curve from Tweaking Marginal Utility per Dollar
    Demand Curves and Income/Substitution Effects
    Unit 5 Assessment
    Unit 5 Assessment
    Unit 6: The Producer
    6.1: Introduction to Production and the Firm
    Short Run vs. Long Run Production
    Accounting Costs vs. Economic Costs
    6.2: Production Decisions in the Short Run
    Production in the Short Run
    Total Product, Marginal Product, and Average Product
    Costs in the Short Run
    Fixed and Variable Costs
    Self-Check Questions
    6.3: Production Decisions in the Long Run
    Production in the Short Run and the Long Run
    Costs in the Long Run
    Long Run Average Total Cost Curve
    Economies and Diseconomies of Scale
    Unit 6 Assessment
    Unit 6 Assessment
    Unit 7: Market Structure: Competitive and Non-Competitive Markets
    7.1: Perfect Competition
    Market Structures
    Perfect Competition and Why It Matters
    Perfect Competition
    How Perfectly Competitive Firms Make Output Decisions
    Maximizing Profits
    Understanding the Short-Run Shutdown
    Review Entry and Exit Decisions in the Long Run
    7.2: Non-competitive Markets: Monopoly
    Introduction to a Monopoly
    How Monopolies Form: Barriers to Entry
    Monopoly
    How a Profit-Maximizing Monopoly Chooses Output and Price
    7.3: Imperfect Competition: Monopolistic Competition and Oligopoly
    Introduction to Monopolistic Competition and Oligopoly
    Monopolistic Competition
    More on Monopolistic Competition
    Oligopoly
    The Prisoner's Dilemma and the Nash Equilibrium
    Oligopolies and Monopolistic Competition
    7.4: Monopolies and Antitrust Policies
    Firms and Markets for Goods and Services
    Corporate Mergers
    Regulating Anticompetitive Behavior
    Regulating Natural Monopolies
    Regulation
    Unit 7 Assessment
    Unit 7 Assessment
    Unit 8: The Role of the Government in a Market Economy
    8.1: Public Goods
    Public Goods
    Rival and Excludable Goods
    Public Goods and Bads, Open Access, and Shared Resources
    8.2: Government Revenue and Expenditures
    Public Finance and Public Choice: The Role of Government in a Market Economy
    Introduction to Taxes, Taxes, and Tax Forms, Financial Literacy
    Public Finance and Public Choice: Financing Government
    8.3: Choices in the Public Sector
    Public Interest Theory and Public Choice Theory
    8.4: Private Bargaining vs. Government Intervention
    Market Failures and Government Policy
    The Coase Theorem
    Unit 8 Assessment
    Unit 8 Assessment
    Study Guide
    ECON101 Study Guide
    Course Feedback Survey
    Course Feedback Survey
    Certificate Final Exam
    ECON101: Certificate Final Exam
    Saylor Direct Credit
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Table of contents

  • What Is Producer Surplus?
  • Practice Questions
  • Answers
  1. ECON101: Principles of Microeconomics
  2. Unit 4: Markets and Maximizing Individual Behavior
  3. 4.1: Maximizing in the Market Place: Consumer Surplus, Producer Surplus and Social Surplus
  4. What Is Producer Surplus?

What Is Producer Surplus?

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Completion requirements

Watch this video, which explains consumer surplus using a graph to help you grasp both the concept and the calculation. Complete the practice questions to make sure you understand the calculation.

What Is Producer Surplus?

 

 

Source: MRU, https://mru.org/dictionary-economics/producer-surplus-definition
Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

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Saylor Academy © 2010-2025 except as otherwise noted. Excluding course final exams, content authored by Saylor Academy is available under a Creative Commons Attribution 3.0 Unported license. Third-party materials are the copyright of their respective owners and shared under various licenses. See detailed licensing information. Saylor Academy®, Saylor.org®, and Harnessing Technology to Make Education Free® are trade names of the Constitution Foundation, a 501(c)(3) organization through which our educational activities are conducted.