# Producer surplus

Alfred Marshall prägte die Begriffe Produzentenrente und Consumer surplus. Sie beschreiben die Differenz zwischen dem Preis am Markt und dem erwarteten Preis von einem Produkt. Die Konsumentenrente und die Produzentenrente stehen sich somit gegenüber und sind wichtige Bestandteile der ökonomischen Wohlfahrt.

## Definition / explanation

The term producer surplus is important in economics as well as in mathematics. The producer surplus is the difference between the production costs and the sales price achieved on the market. Accordingly, producer surplus describes the profit a company makes on the market and is therefore desirable for manufacturers.

Producer surplus = sales - variable costs

## Producer's rent in restricted competition

The producer surplus is particularly interesting under the conditions of restricted competition. In the case of optimal price discrimination, the provider receives the sum of the Consumer surplus and the producer surplus. In a competition he wins the welfare maximum.

However, he must know about the cost structure in order to correctly assess his profit situation. A monopoly must set the prices or the amount to get in one monopoly to increase the producer surplus in a profit-maximizing way. Most of the time, however, there is a decline in welfare, since an undersupply of monopoly goods usually occurs when there is an oversupply of goods.

example - For example, bed linen is sold at a price of 40 euros, which is the market price. Another provider would have offered the bed linen for 35 euros, as its production costs are lower.

Compared to the general retail price of 40 euros, the other provider saved 5 euros. The 5 euros saved then denote the so-called producer's pension.

## Summary

• the welfare / profit of producers is measured by means of the producer surplus
• Difference between the price at which the provider would be willing to produce and the market price
• the greater the difference, the greater the welfare for the producers
• describes the profits in the market
• For manufacturers, the producer surplus is something positive
• entspricht grafisch dem Flächenstück über der sogenannten Supply curve sowie unter dem Preis von einem Gut
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