To calculate the Producer Surplus (PS):
PS=(MP−M)×QS
Where:
Producer Surplus is the amount of extra capital a producer earns from an increase in market price due to an increase in demand. It is the difference between what producers are willing to accept for a good or service versus what they actually receive.
Let's assume the following values:
Using the formula:
PS=(50−30)×100=20×100=2000 dollars
The Producer Surplus is $2000.