Total surplus
Definition. Total surplus, also called total economic welfare, is the sum of consumer surplus and producer surplus in a market, measuring the overall net benefit that buyers and sellers gain from trading. It captures the gains from exchange enjoyed by both sides at the prevailing price and quantity.
Total surplus is maximised at the free market equilibrium in the absence of market failure, which is why that allocation is described as allocatively efficient. Underproduction or overproduction creates a deadweight loss.
This term belongs to Consumer and Producer Surplus in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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