Introduction to Producer Surplus

By Jodi Beggs, About.com Guide

As long as there is no price discrimination present, a good or service is sold to all consumers at the same price, and this price is determined by the equilibrium of supply and demand. Because firms face different marginal costs for different units of production, the market price and a firm's willingness to sell are generally not the same.

The difference between firms' willingness to sell and the price that they actually get for their product is referred to as producer surplus, since it represents the "extra" benefits that producers get from selling an item in excess of the marginal cost that they incur to make the item.

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• What Is Producer Surplus?
• Willingness to Sell Versus Price
• Producer Surplus and the Supply Curve
• Producer Surplus Versus Profit

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