How to calculate total surplus?
Understand the Problem
The question is asking for the method to calculate total surplus, which typically involves understanding the concepts of consumer surplus and producer surplus in economics. Total surplus is the sum of both, representing the overall benefit to society from the production and consumption of goods and services.
Answer
Add consumer surplus and producer surplus together.
The final answer is to calculate total surplus by adding consumer surplus and producer surplus together.
Answer for screen readers
The final answer is to calculate total surplus by adding consumer surplus and producer surplus together.
More Information
Total surplus is a measure of the overall benefit to society from the production and consumption of goods. It reflects the gains from trade and is maximized when markets are perfectly competitive.
Tips
Make sure to correctly identify consumer and producer surplus areas on a demand and supply graph to accurately calculate total surplus.
Sources
- Khan Academy - Consumer Surplus, Producer Surplus, and Market Efficiency - khanacademy.org
- Investopedia - Total Surplus Definition - investopedia.com
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