Microeconomia

Consumer & Producer Surplus

A common principle in economics is that when a person stops making money, really is losing, and when you stop paying money, is winning. Consumer surplus is the amount that buyers are willing to pay less than the amount you actually pay, measures the benefit that buyers receive from a good in terms in which they perceive. Moreover producer surplus is the amount received by the seller, minus the cost of production. Measures the benefit of the vendors participating in the market.

As we have seen, consumer surplus in economic theory, notes the difference between the price you would pay for a consumer product and really pays. This price coincides with the marginal utility of the last unit consumed, although the consumer was willing to pay for the above units be a higher price for their higher marginal utilities, resulting in such excess, which is reasonable from the viewpoint of diminishing marginal utility.

But we should also consider, that the producer surplus needs to emphasize that it's the difference between the total revenue of a provider of a good or service and the payment that would induce him to maintain his level of supply. Notably, the producer surplus is most easily seen in the short to long term. If the producer surplus is defined as total revenue minus total variable cost, producer surplus in the long term for perfectly competitive industry is zero. In long-run equilibrium all costs are variable and the total cost is equal to total income, so that no producer surplus.

In conclusion economists use the terms consumer surplus and producer surplus to illustrate the economic benefits created by producers or consumers in a given market. Consumer surplus depends on the maximum price a consumer is willing to pay for a particular good. If the price of this particular commodity is less than the maximum price the consumer is willing to pay, the consumer obtains consumer surplus. In turn, the producer surplus depends on the minimum prices at which producers are willing to sell their products. The producer receives producer surplus when consumers are willing to pay more than the minimum producer price.

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