What is Surplus in Economics?
When the price is above the equilibrium price, the quantity supplied exceeds the quantity demanded. There is excess supply or a surplus. Suppliers will lower the price to increase sales, thereby moving toward equilibrium. In mainstream economics, economic surplus , also known as total welfare or total social welfare or Marshallian surplus (after Alfred Marshall), is either of two related quantities: Consumer surplus , or consumers' surplus , is the monetary gain obtained by consumers because they are able to purchase a product for a price that is less than the highest price that they would be willing to pay. Producer surplus , or producers' surplus , is the amount that producers benefit by selling at a market price that is higher than the least that they would be willing to sell for; this is roughly equal to profit (since producers are not normally willing to sell at a loss and are normally indifferent to selling at a break-even price). A surplus describes the amount of an...