Producer Surplus

Statement

Producer surplus refers to the difference between the minimum price a producer is willing and able to sell a good or service at and the actual amount they receive.

Notes

Producer surplus is a measure of the welfare producers derive from a transaction. On a diagram it is the area above the supply curve and below the price line, up to the quantity sold; how it is read off the equilibrium diagram, alongside consumer surplus, is set out in consumer and producer surplus.