If you're seeing this message, it means we're having trouble loading external resources for Khan Academy.

If you're behind a web filter, please make sure that the domain *.kastatic.org is unblocked.

Consumer and producer surplus

Consumer and producer surplus

Many times, the equilibrium price is lower than the highest price some folks are willing to pay. For all consumers, this is called consumer surplus. Similarly, the price might be higher than the minimum price at which some are willing to produce. For all the producers, this is called producer surplus. This tutorial covers them both with an emphasis on the visual.

Deadweight loss

We can often lose economic efficiency because of things like price floors, ceilings and taxes. This loss in surplus (people who have more marginal benefit than marginal cost are not buying or people who have more marginal cost than benefit are buying) is called deadweight loss.

Public goods and externalities

In many scenarios thinking only about producers' marginal cost or consumers' marginal benefit does not fully capture *all* of the costs or benefits from the production/use of a product. In this tutorial, we explore these externalities (negative and positive ones) to think a bit deeper about ways to maximize total surplus not just for producers and consumers, but for society as a whole.