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Economics 101: Producer Surplus | SterlingTerrell.net

Economics 101: Producer Surplus


In the field of economics, what is producer surplus?

Producer Surplus is the difference between what a producer is paid, and what a producer was willing to take for a particular good or service.

For instance:

  • A car company might be willing to take $30,000 for producing and selling a new car. But the car sells for $35,000. Producer surplus = $5,000.
  • A cotton farmer might be willing to take $.65 per pound for his cotton harvest. But he sells it for $.75 per pound. Producer surplus = $.10 per pound.
  • And I might be willing to take $2.00 for a used book. But that does not keep me from selling the book for $17.00.