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How to calculate Producer surplus

The Producer surplus formula, with plain worked examples you can check yourself.

Producer surplus = P − C

Worked examples

P = 120 · C = 110Producer surplus = 10
P = 60 · C = 50Producer surplus = 10
P = 60 · C = 30Producer surplus = 30

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Market Structures.

Related terms

Supply and demandMonopolyOligopolyPerfect competitionExternalityPublic good

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