Total surplus

Total surplus is a measure of the overall benefit created by a market transaction, combining the gains of buyers and sellers. It consists of consumer surplus, which is the difference between what consumers are willing to pay and what they actually pay, and producer surplus, the difference between the market price and the lowest price producers are willing to accept. When markets operate efficiently, total surplus is maximized, reflecting the most valuable exchange of goods and services for all participants involved. It helps assess how well resources are allocated in a market economy.