ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Total market surplus can be calculated as total benefits – total costs. Alternatively, we can calculate the area between our marginal benefit and marginal cost, constrained by quantity. This is the equivalent of finding the difference between the marginal benefits and the marginal costs at each level of production.

Detailed explanation-2: -Economic surplus = consumer surplus + producer surplus. It denotes the current market scenario based on supply and demand.

Detailed explanation-3: -Producer surplus = Market price – Producer’s Minimum Acceptable Price. Alternatively, it is also calculated as follows: Producer surplus = Total Revenue – Production Cost.