How to Calculate a Surplus
A market surplus equals quantity supplied minus quantity demanded at the going price: surplus = Qs − Qd, and it appears only when price sits above equilibrium.
The Market Surplus formula
Calculator
Enter both equations and the price the market is held at to get Qs, Qd and the surplus of unsold output.
The a in Qd = a − bP.
Enter b as a positive number.
Zero when supply is Qs = dP, running straight through the origin.
A surplus appears only when this price sits above equilibrium.
Sellers bring 32 more units to market at $28 than buyers will take, and those units go unsold.
- Quantity supplied at that price
- 56
- Quantity demanded at that price
- 24
- Equilibrium price
- $20
- Equilibrium quantity
- 40
- Market condition
- Surplus
Substitute the held price into the supply equation to get Qs.
Substitute the same price into the demand equation to get Qd.
The price the market would settle at on its own, with no legal floor.
How to calculate Market Surplus, step by step
- 1Identify the price in question. Use the price the market is held at, such as a binding price floor or a minimum wage.
- 2Find quantity supplied at that price. Substitute the price into the supply equation, or read Qs off the supply curve.
- 3Find quantity demanded at that price. Substitute the same price into the demand equation, or read Qd off the demand curve.
- 4Subtract and label the units. Surplus = Qs − Qd. A negative answer means the price is below equilibrium, so the market has a shortage instead.
Worked example: Market Surplus
In a market where Qd = 80 − 2P and Qs = 2P, equilibrium is P = $20 with Q = 40. At a legal floor of $28, Qs = 2(28) = 56 and Qd = 80 − 2(28) = 24, so the surplus is 56 − 24 = 32 units of unsold output.
Market Surplus questions
Is a market surplus the same as consumer surplus?
No. A market surplus is unsold output when the price sits above equilibrium, while consumer surplus is the gain buyers get from paying less than their maximum willingness to pay.
What causes a surplus?
A price held above equilibrium causes a surplus, since the high price pulls in extra sellers while pushing buyers away.
How does a free market clear a surplus?
Sellers cut the price, which raises quantity demanded and reduces quantity supplied until the two are equal again.
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