How to Calculate Total Surplus
Total surplus equals consumer surplus plus producer surplus, the whole area between the demand and supply curves up to the quantity traded.
The Total Surplus formula
Calculator
Enter inverse demand P = a − bQ and inverse supply P = c + dQ to get consumer, producer and total surplus.
The highest price any buyer would pay, where demand meets the price axis.
How much the price buyers will pay falls per extra unit. Enter it as a positive number.
The lowest price at which any seller would supply.
How much sellers' asking price rises per extra unit.
The whole area between the two curves out to 40 units comes to $600, and the shortcut ½ × Q × (intercept gap) agrees at $600.
- Equilibrium price
- $20
- Quantity traded
- 40
- Consumer surplus
- $400
- Producer surplus
- $200
- Who gains more
- Buyers gain more
Where the two curves cross, found by setting the demand price equal to the supply price.
The base both surplus triangles sit on.
The triangle below demand and above the market price: what buyers gain by paying less than their maximum.
The triangle above supply and below the market price: what sellers gain by charging more than their minimum.
How to calculate Total Surplus, step by step
- 1Find the equilibrium price and quantity. Set Qd = Qs, or read off the point where the two curves cross.
- 2Compute consumer surplus. ½ × quantity × (demand's price intercept − price), the triangle below demand and above the price.
- 3Compute producer surplus. ½ × quantity × (price − supply's price intercept), the triangle above supply and below the price.
- 4Add the two triangles. Total surplus = consumer surplus + producer surplus, measured in dollars.
- 5Use the shortcut as a check. The two triangles share a base, so at equilibrium total surplus also equals ½ × quantity × (demand intercept − supply intercept).
Worked example: Total Surplus
Demand is P = 40 − 0.5Q and supply is P = 10 + 0.25Q, which cross at Q = 40 and P = $20. Consumer surplus = ½ × 40 × (40 − 20) = $400 and producer surplus = ½ × 40 × (20 − 10) = $200, so total surplus = 400 + 200 = $600. The shortcut agrees: ½ × 40 × (40 − 10) = $600.
Total Surplus questions
Why is total surplus largest at the competitive equilibrium?
Every unit whose value to a buyer exceeds its cost to a seller gets produced, and no unit past that point does, so no gain is left unclaimed and nothing wasteful is made.
What happens to total surplus when a tax is imposed?
Consumer and producer surplus together fall by more than the tax revenue collected, and the difference is the deadweight loss from trades the tax prevented.
Can you find total surplus when the price is not at equilibrium?
Yes. Measure both areas only out to the quantity actually traded, keeping in mind that a price control turns the consumer surplus region into a trapezoid; the area lost to the right of that quantity is the deadweight loss.
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