What is an economic surplus?

The economic surplus is a business term used to describe several different situations. The basic definition of economic surplus is that the financial assets of the entity, such as the market, business, government or individual, exceed its financial obligations. However, this basic definition is only a point of jumping to describe many forms of economic surplus.

For individuals, the economic surplus can be described in several ways. If the person has a certain amount of money at the beginning of the month, it does not spend it in the month, its budget is in excess of the remaining amount. However, the excess may also be used to describe the difference between what an individual or consumer is willing to pay for something, compared to what is really true. If a person is willing to buy a couch for $ 800 in USD (USD), but finds the same model for $ 600, the economic surplus is considered $ 200, which has not invented that the consumer was willing.

In business, the excess may also be a means to explain the net assets of the company and the level of success. During the time, if the company's income exceeds all expenses, including labor costs, production costs, transport and investment losses, the remaining amount is an economic surplus. This number also defines how profitable the company has been for a period of time. If the company's revenues are equal to a million dollars and the total expenditure equals $ 500,000, the remaining $ 500,000 is considered a profit or, in other words, an excess.

, however, in finance, they have dates like surplus usually more complicated applications. For example, in the basic chart of supply and demand, several different types of economic surplus can be involved. In addition to the surplus of the consumer, it is also necessary to consider the amount of excess producers. This number is achieved by surplus from operating costs for suppliers.

government economic surplus occurs when the amount of money the government earns forMedium by tax, tariffs and other means, exceeds the amount it spends on government programs such as the army, public work, salaries and policy implementation. Government taxes naturally collect a piece from the excess of consumers and producers. Ideally, the region will achieve total or social surplus when consumers have sufficient profit to make manufacturers profitable, while taxes on both keep the government in excess or balance, but are not high enough to bring businesses or individuals to deficit. This balance, although ideal, rarely occurs.