Economic Surplus

Definition

Economic surplus is the total net benefit or value gained by consumers and producers in a market transaction. It is the difference between the maximum price consumers are willing to pay and the minimum price producers are willing to accept.

Related terms

Consumer Surplus: Consumer surplus refers to the difference between what consumers are willing to pay for a good or service and what they actually have to pay.

Producer Surplus: Producer surplus represents the difference between the price at which producers are willing to sell a good or service and the actual price they receive.

Total Surplus: Total surplus is the sum of consumer surplus and producer surplus, representing the overall net benefit derived from an economic transaction.