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How to Calculate Producer Surplus and Consumer Surplus from Supply and Demand Equations | Think Econ 

Think Econ
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In this video we explain how you can calculate Producer Surplus and Consumer Surplus step-by-step, starting with nothing but the supply and demand equations! We go over an algebraic solution to show you exactly how to calculate consumer and producer surplus given the demand and supply equations!
This channel is just getting started so if you enjoyed the content, let us know by liking, commenting, sharing, and subscribing to the channel; it really helps us out. ALOT. We release weekly videos covering all things ECONOMICS!
#microeconomics #ProducerSurplus #ConsumerSurplus
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10 ноя 2022

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Комментарии : 133   
@ThinkEcon
@ThinkEcon Год назад
If you found this video helpful, consider supporting the channel by liking the video and subscribing to the channel to see more content like this! :)
@mphomadisha4215
@mphomadisha4215 Год назад
It literally made CS and PS simple wow, thanks. I need deadweight loss
@ThinkEcon
@ThinkEcon Год назад
Glad to hear it! Here’s our deadweight loss video; ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-_p2RlWgc0jU.html
@olebengmokhatu5904
@olebengmokhatu5904 11 месяцев назад
Dead weight loss
@ThinkEcon
@ThinkEcon 11 месяцев назад
@@olebengmokhatu5904 Check out our Deadweight Loss video here: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-_p2RlWgc0jU.html
@hungnguyen-gs3oe
@hungnguyen-gs3oe 8 месяцев назад
thank a lot sir, you just saved my life.
@alassanemagassouba9420
@alassanemagassouba9420 Год назад
thank you so much; your explanations are so effective and easy to understand
@ThinkEcon
@ThinkEcon Год назад
You're very welcome! I'm really glad to hear that :)
@Pianodaddyy
@Pianodaddyy Год назад
Liked and Subscribed! Thank you for your help!!!
@Lee-lee-w1r
@Lee-lee-w1r Месяц назад
This is amazing. I understood it very well 🎉🎉🎉
@ibrahimathar1033
@ibrahimathar1033 Год назад
thank you so much man, have an exam tomorrow morning and this came in clutch
@ThinkEcon
@ThinkEcon Год назад
Glad to hear it! Good luck on the exam!
@kikoferras7369
@kikoferras7369 7 месяцев назад
God Bless you for this.
@KhimKhan
@KhimKhan 6 месяцев назад
Wow 10q man! keep it up 🎉🎉
@owenthomas3621
@owenthomas3621 Год назад
Great video
@avtomerebashvili8145
@avtomerebashvili8145 3 месяца назад
thanks for that simpliest explanation, u saved me
@ThinkEcon
@ThinkEcon 3 месяца назад
Glad I could help! :)
@user-kh8ug6nd8c
@user-kh8ug6nd8c 7 месяцев назад
Thankyou for the knowledge
@capoags2438
@capoags2438 Год назад
thank you so much, your explanations are so effective and easy to understand sir
@ThinkEcon
@ThinkEcon Год назад
Glad to hear that!
@vihanga193
@vihanga193 8 месяцев назад
so clear thanks
@user-oj5by9tu8e
@user-oj5by9tu8e 10 месяцев назад
Thank you for clear explanations. liked and subscribed already :)
@ThinkEcon
@ThinkEcon 10 месяцев назад
I’m glad you enjoyed the video! :)
@moseswamunyima3962
@moseswamunyima3962 2 месяца назад
Wow, you make it look easy! Thank you
@ThinkEcon
@ThinkEcon 2 месяца назад
I’m happy to hear that. You’re very welcome! ☺️
@akbotatoktarbekova2701
@akbotatoktarbekova2701 2 месяца назад
thank you! loved it, so simple
@ThinkEcon
@ThinkEcon 2 месяца назад
I’m glad you found it helpful!
@cemilkolgu6579
@cemilkolgu6579 Год назад
You are the best sir, thank you.
@ThinkEcon
@ThinkEcon Год назад
You're very welcome!
@tahseentasneem3296
@tahseentasneem3296 25 дней назад
Thank you so much ❤it was very helpful ❤
@ThinkEcon
@ThinkEcon 25 дней назад
You're very welcome!
@priyanshukr.sharma2697
@priyanshukr.sharma2697 6 месяцев назад
this is really one of te finest explanation literally the best one
@ThinkEcon
@ThinkEcon 6 месяцев назад
I appreciate the compliment! Glad you found it helpful! :)
@AuthenticallyAlysiaa
@AuthenticallyAlysiaa Месяц назад
SOOOO HELPFUL 😢😢. THANK YOU
@ThinkEcon
@ThinkEcon Месяц назад
You're welcome! I'm glad you found it helpful!
@ooglyrat7010
@ooglyrat7010 6 месяцев назад
You saved my life honest to god 🙏🏻
@ThinkEcon
@ThinkEcon 6 месяцев назад
Glad you found the video helpful! :)
@freezymedia883
@freezymedia883 Год назад
Typing from Africa specifically zambia you have just helped me do my assignment
@ThinkEcon
@ThinkEcon Год назад
I'm glad to hear that!
@user-bb7ih9uc5x
@user-bb7ih9uc5x 9 месяцев назад
Same category the man is doing the needful
@domnicedits1268
@domnicedits1268 2 месяца назад
Zambia ku chalo
@izzybellz5346
@izzybellz5346 2 месяца назад
❤ love your videos, very helpful..
@ThinkEcon
@ThinkEcon 2 месяца назад
I'm really glad to hear that! :)
@Mudenda_M
@Mudenda_M 2 месяца назад
This is great👍🏾😃
@ThinkEcon
@ThinkEcon 2 месяца назад
Thank you!
@ahmedbusiness4702
@ahmedbusiness4702 2 месяца назад
Very good ❤
@victoriasepiashvili
@victoriasepiashvili 10 месяцев назад
Amazing video ❤
@ThinkEcon
@ThinkEcon 10 месяцев назад
Thank you very much :)
@vishwarana8698
@vishwarana8698 10 месяцев назад
Please share video for tax subsidies and quotas on supply n demand curve calculations 😊
@abrahimshorbtli9714
@abrahimshorbtli9714 4 месяца назад
Amazing explanation thank you sir 🧠
@ThinkEcon
@ThinkEcon 4 месяца назад
You're very welcome!
@KunaiKrazy
@KunaiKrazy Месяц назад
To be honest, I didn't have the most recent version of a textbook for my Energy Economics class so I had no examples to go off of. All other tutorials, including CHATGPT did not mention finding the 0 value, 54 value, and made no mention of finding the difference between the 54 and the 18 value and then Basexheight/2. Thank you so much for this. I think I will go get the book because it should not have taken me this long.
@ThinkEcon
@ThinkEcon Месяц назад
I feel like most textbooks don't even go over that in much detail, which is a shame. We take a lot as given and I'm glad I was able to provide a truly step-by-step solution to walk you through it! You got this!
@reepoponne
@reepoponne 8 месяцев назад
Amazing video Thank you
@ThinkEcon
@ThinkEcon 8 месяцев назад
You're welcome!
@Siyasat1
@Siyasat1 Год назад
Thank you !!
@ThinkEcon
@ThinkEcon Год назад
You're welcome!
@andrewakr7205
@andrewakr7205 Год назад
Thank you!
@ThinkEcon
@ThinkEcon Год назад
You're very welcome!
@user-bf1hv5dj7o
@user-bf1hv5dj7o Год назад
thank you sir 🙌👏
@ThinkEcon
@ThinkEcon Год назад
You're most welcome!
@ampiireliz
@ampiireliz 10 месяцев назад
Thank you❤
@ThinkEcon
@ThinkEcon 10 месяцев назад
You're welcome :)
@alishaadhikari6108
@alishaadhikari6108 Год назад
thank you so much
@ThinkEcon
@ThinkEcon Год назад
You're very welcome!
@mankwongng185
@mankwongng185 5 месяцев назад
very useful !
@ThinkEcon
@ThinkEcon 5 месяцев назад
Glad to hear it!
@utkukrky698
@utkukrky698 8 месяцев назад
Thanksss ❤
@ThinkEcon
@ThinkEcon 8 месяцев назад
You’re welcome!
@carlanavarrofernandez5021
@carlanavarrofernandez5021 Год назад
amazing video
@ThinkEcon
@ThinkEcon Год назад
Thank you very much!
@upsingh751
@upsingh751 3 месяца назад
superb sir ji. love from india
@ThinkEcon
@ThinkEcon 3 месяца назад
Glad you enjoyed!
@tharangiwattuhewa1782
@tharangiwattuhewa1782 4 месяца назад
Thank you
@ThinkEcon
@ThinkEcon 4 месяца назад
You're welcome!
@luckytenygeay4968
@luckytenygeay4968 11 месяцев назад
Thanks u I learn something
@ThinkEcon
@ThinkEcon 11 месяцев назад
You're welcome! I'm glad to hear that!
@abdallaabdullahi5942
@abdallaabdullahi5942 Год назад
thank you
@ThinkEcon
@ThinkEcon Год назад
You're welcome!
@franb22
@franb22 Год назад
gotcha!
@abdihakimibrahim-so6dl
@abdihakimibrahim-so6dl 10 дней назад
Well done
@ThinkEcon
@ThinkEcon 10 дней назад
Thanks!
@greenwaddledee1743
@greenwaddledee1743 Месяц назад
Good luck on your exams yall
@user-no3ws6zp7j
@user-no3ws6zp7j 5 месяцев назад
Exallent
@yahk3
@yahk3 8 месяцев назад
Very useful
@ThinkEcon
@ThinkEcon 8 месяцев назад
Glad to hear it!
@eatloaf
@eatloaf Год назад
Great content but i noticed that the question i have here is quite different yours; qs= p=2q/3 + 1 and qd= p=10_2q how do i approach this please?
@ThinkEcon
@ThinkEcon Год назад
First things first. You’re working with something called the INVERSE demand and supply equations. This is where P is isolated and Q is in the equation instead of the other way around. Luckily for you, solving requires the same steps, so at equilibrium both price AND quantity are equal. In your case, you would set the P equations equal to each other and solve for Q. Once you have Q, sub it back into either the inverse supply or inverse demand equation to get equilibrium P. Does this help?
@peacekeeper-apexlegends9294
Thank you so much! If you don't mind, how do I go about it if my demand and supply functions are different? If they look like this: Demand function: P(Q) = 5-0,0000001Q Supply function: P(Q) = 0,0000001Q I found the equilibrium price and quantity by putting both functions equal to each other, and then solving. And then the other was found by inputting the new value into one of the original functions just like you did. I got Equilibrium price = 2,5 and quantity = 25000000 My question is, how do I find where the demand function crosses the X and Y axis? There is no P in my function, so I'm a little bit confused.
@ThinkEcon
@ThinkEcon Год назад
So what you've got is something called the inverse demand function. Instead of Q on the left side of the equation, it's P. For calculating the X and Y intercepts, you just set P and Q equal to zero one at a time, and solve for the other value. Does this help?
@peacekeeper-apexlegends9294
@@ThinkEcon Oh I see, thank you very much!! So for the demand function, I would basically be able to straight out read the y-intercept from this type of function by looking at the first number, in this case 5 right? Since the other part in the function would always result in 0?
@ThinkEcon
@ThinkEcon Год назад
@@peacekeeper-apexlegends9294 yes, that’s exactly correct! In fact, the inverse demand function is already in y = mx + b form, ready to be graphed (like you said). The regular demand equation is actually not what you’re graphing since it interprets the dependent variable (y variable) as Q instead of P. They’re the exact same equations, just rearranged!
@peacekeeper-apexlegends9294
@@ThinkEcon Appreciate it thank you, earned a sub! Your content have helped me out so much!
@ThinkEcon
@ThinkEcon Год назад
@@peacekeeper-apexlegends9294 I’m glad it’s been helpful, and appreciate the kind words :)
@phindarishasohlang910
@phindarishasohlang910 Год назад
Please calculate consumer surplus and producer surplus using integration
@syndafloden333
@syndafloden333 8 месяцев назад
ure a god man
@tomascorreia7055
@tomascorreia7055 8 месяцев назад
could you explain the theory behind CS being above market price and below demand function and PS below market price and above supply function?
@ThinkEcon
@ThinkEcon 7 месяцев назад
Absolutely. It has to do with a consumer's willingness to pay and a producer's willingness to sell. If you're willing to pay $20 for a t-shirt but only have to pay $5, then your consumer surplus is $15 in savings. Now on the supply and demand graph is area would be the triangle below the demand curve and above the equilibrium price of $5. This means that ANYONE with a willingness to pay above $5 receives a benefit, no matter if their willingness to pay was $6 or $600. On the producer side, imagine you're willing to sell a good as cheap as $10, but equilibrium price is $50. Then your producer surplus is $40. ANY seller whose willingness to sell is under $50 will experience producer surplus. On the graph this is the area below the selling price and above the supply curve. I hope this helps, if not, let me know and I can try to explain it even more clearly!
@outstanding8240
@outstanding8240 Год назад
HI, the 270 and the 10 are random values that the professor has added or it is the actual base formula?
@ThinkEcon
@ThinkEcon Год назад
Those are the actual values in this particular example. They will change question to question
@delealabi1866
@delealabi1866 10 месяцев назад
I was bemused as to how the figures just materialized. Thanks for clearing this. @@ThinkEcon
@ThinkEcon
@ThinkEcon 10 месяцев назад
My pleasure! Every question's figures will be different, but to show you the math involved, I did need to include values of my own! @@delealabi1866
@ryanantoun6887
@ryanantoun6887 10 месяцев назад
are Qd = 270 -5p and Qs = 10P equations used for every single problem?
@ThinkEcon
@ThinkEcon 10 месяцев назад
Great question! No, each question will have different Qd and Qs equations. They are known as the Demand and Supply Equations and represent the lines you see on a standard Supply and Demand graph! I just used these equations for the example but the steps will work for any Qd and Qs equations
@vidurasampath8688
@vidurasampath8688 Год назад
Thanks 🇱🇰
@ThinkEcon
@ThinkEcon Год назад
You're welcome!
@munachinweze3694
@munachinweze3694 Год назад
How did you get the figures that you used for quantity supplied and quantity demanded
@ThinkEcon
@ThinkEcon Год назад
The supply and demand equations, you mean? They’ll always be given to you, or at the very least, be given as a one-step problem
@dulshansenadheera3084
@dulshansenadheera3084 11 месяцев назад
Thanks for the video..
@calmingarts2932
@calmingarts2932 3 месяца назад
What is meant by consumer and producer surplus in the market equilibrium graph? Why would you need to use the area of a triangle in order to work out the producer and consumer surplus? Thank you.
@ThinkEcon
@ThinkEcon 3 месяца назад
The idea is that consumer surplus is all of the value the consumers receive from purchasing something that was cheaper than their "reservation price" or the maximum they're willing to spend on the good. The triangle formed under the demand curve and above the equilibrium price represents that amount. The lower the price, the bigger the triangle, and therefore the bigger the consumer surplus, since consumers save more money. The exact opposite is true on the supply side. Producers benefit more from a high price, and so as the price goes up, producer surplus increases. I hope this helps :)
@calmingarts2932
@calmingarts2932 3 месяца назад
@@ThinkEcon Thank you 😊
@user-nt9sf4cm3l
@user-nt9sf4cm3l 10 месяцев назад
Can the supply curve start from any number apart from 0?
@ThinkEcon
@ThinkEcon 10 месяцев назад
Yes. Remember, as supply curve will often take on the linear form y = mx + b where m is the slope, and b is the y intercept. Any time b is a non-zero integer, the supply curve will start apart from zero!
@xay8336
@xay8336 Месяц назад
Sir, where did you got the number '270' & '5P'? please help
@ThinkEcon
@ThinkEcon Месяц назад
Q = 270 - 5P is the equation for the demand curve. Most of the time the specific demand equation will be given in the question.
@mirzaseyab6206
@mirzaseyab6206 6 месяцев назад
What about if demand and supply curves are not lines ? If they are quadratic...
@AlbertChanda-oy9m
@AlbertChanda-oy9m 4 месяца назад
@JosephineMulenga-ol4nt
@JosephineMulenga-ol4nt 8 месяцев назад
How is the base of the producer's supply becoming 80?
@Kermitsbgc
@Kermitsbgc Год назад
i don't know who needs to hear this, but chatgpt will help you study and explain math for you
@Makbowman
@Makbowman 6 месяцев назад
Don’t trust it. Especially if you have variables like Pb*, it doesn’t understand them well and confuses you more. I corrected ChatGPT many times and it ‘apologized’ for its mistakes
@engravedwithelegance3651
@engravedwithelegance3651 5 месяцев назад
It sure does
@aaaaaaaaaaaaaaaa7498
@aaaaaaaaaaaaaaaa7498 5 месяцев назад
Inaccurate
@AlbertChanda-oy9m
@AlbertChanda-oy9m 4 месяца назад
✔️​@@aaaaaaaaaaaaaaaa7498
@jaredcobbett6951
@jaredcobbett6951 Месяц назад
@@Makbowmanthat’s amazing it apologises 😂
@derickdoh2526
@derickdoh2526 Год назад
Hi Can You Help Me Find The Consumer Surplus At A Price Of $10 Given The Equations Qd=20-P and Qs= P ?
@ThinkEcon
@ThinkEcon Год назад
Of course! P= $10 Equilibrium Q = 10 Find Y-intercept of demand curve: Set Qd = 0 and solve for P. 0 = 20 - P P = 20 Therefore y-int is 20. Calculate area of the Consumer Surplus triangle: CS = (b*h)/2 CS = (10*10)/2 CS = 100/2 CS = $50 Hope this helps!
@derickdoh2526
@derickdoh2526 Год назад
@@ThinkEcon Okay. I've Got Another One. Qd=30-P Qs=2P Find The Consumer Surplus At A Price Of $15
@MrTIPTOE415
@MrTIPTOE415 5 месяцев назад
How did P become 18
@BI-km6dl
@BI-km6dl 3 месяца назад
It managed to live an additional year after its 17th birthday.
@timothysichone4109
@timothysichone4109 2 месяца назад
He divided it by 15
@Onlineclass.101
@Onlineclass.101 Год назад
you saved my life.
@ThinkEcon
@ThinkEcon Год назад
All in a day's work
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