Producer Surplus

The Producer Surplus sums the difference between how much producers sell a product and the minimum amount they are willing to get for producing it.

Example

The inverse supply for bananas is `P = 1 + 2 Q_s`.

If a banana is sold for $5, producers will produce `Q_s = \frac{5 - 1}{2} = 2`.

The Producer Surplus is `\text{PS} = \frac{\left( 5 - 1 \right) \times 2}{2} = \frac{4 \times 2}{2} = $4`.

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