Question

Total surplus in a market is equal to a. value to buyers - amount paid by buyers. b. amount received by sellers - costs of sellers. c. value to buyers - costs of sellers. d. amount received by sellers - amount paid by buyers.

Answer 1

Answer:

Option (C) is correct.

Explanation:

Total surplus refers to the sum total of producers surplus and consumers surplus. Graphically, it is the area between the demand curve and supply.

Consumers surplus refers to the benefits obtained by the buyers. It is the difference between the consumer's willingness to pay and the actual amount paid for the product.

Producers surplus refers to the benefits obtained by the producers. It is calculated as the difference between the price received by the sellers and the producer's willingness to accept the price.  

The total surplus is the difference between the consumer's willingness to pay for the product and the producer's willingness to accept the price.