Please Help Me With This SIMPLE Economics Query?

Question

In light of the fact that there exists "A Consumer's Surplus", Can One equally argue that A "Producer's Surplus" also exists?

If not, why?

Answer 1

Some answers are correct but dont quite explain. Consumers surplus exists if the demand curve slopes down - some people would have been willing to pay more than they did for an item and are therefore 'in surplus' as far as their utility goes. Producer's surplus exists where the supply curve is upward sloping - so some producers would have been willing to sell at a lower price. In 'perfect competition' the supply curve is horizontal so there is no producers surplus. So producers surplus only exists in the absence of perfect competition.

Answer 2

Yes, there is a "producer surplus" which is measured as the difference between the price which sellers are willing and able to supply a good for and the price they actually receive. Producer surplus measures producers welfare. If for example, a producer is willing to sell a commodity for $300, but as a result of an upward shift in demand he was able to sell it for $350; the producer surplus is the difference $350-$300 = $50. The producer's welfare has improved by $50.

Answer 3

noeu is off on the wrong track. a consumer surplus is the difference between the price someone is willing to pay, and they actually pay. producer surplus is difference between what producer is willing to sell for, and the price they actually get. there will be a surplus if there is an upwards sloping supply curve. look at a demand and supply diagram. the area between the y axis, supply schedule, and equilibrium price line is producer surplus.

i did not take this answer from wikipedia, but i found a link that may explain it to you http://en.wikipedia.org/wiki/Producer%27s_surplus
as it helps to actually see it illustrated

Answer 4

It's called supply and demand.
You do get producer's surpluses, but these tend to be 'real' things. i.e. crops where uncontrollable variables affect the quality and quantity of crop(you also get shortages) Stock markets are built to 'gamble' in the process known as futures.

I think your question is more around a controlled area. Basically a brand process.
A good example in today's developed world would be electronic 'gadgets' Play staion 3 for example, by controlling the output, marketing can be used to create demand in excess of capacity, this creates a 'consumer surplus' the purpose of which is commercial.
I'm sure you can work the reasons out for yourself.

So there is no 'benefit' to a deliberate producers surplus.

Answer 5

Consumer's surplus is imaginay.It cannot be quantified.There is nothing called producers surplus.He has to sell at cost plus normal profits.If due to increase in demand and gets an unexpected increase in price,it is called "supernormal profits".Consumer Surplus can not be negative.But if the price falls below cost,producer is under "loss".

Answer 6

producers have to have a surplus to supply demand

Answer 7

I don't know who it was said this, but the called it the invisible hand. It is to do with supply and demand, like all the same products from the productlion end, but the marketters will order more of a stock if more is demanded.

Answer 8

there is a producer surplus