Economic Surplus Calculator

Formula

The formula to calculate the economic surplus is:

\[ \text{ES} = \text{CS} + \text{PS} \]

Where:

ES is the economic surplus ($).
CS is the consumer surplus ($).
PS is the producer surplus ($).

What is Economic Surplus?

Economic surplus, also known as total welfare or Marshallian surplus, is a measure of the economic benefit that is derived by consumers and producers as a result of participating in the market. Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay, while producer surplus is the difference between what producers are willing to accept for a good or service and the actual price they receive. The sum of these two surpluses reflects the total gains from trade in the market.

Example Calculation

Let's consider an example:

Consumer Surplus (CS): $500
Producer Surplus (PS): $300

Using the formula to calculate the economic surplus:

\[ \text{ES} = 500 + 300 = 800 \text{ dollars} \]

This means that the economic surplus for this scenario is $800.