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

[@ThinkEcon]

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]

It literally made CS and PS simple wow, thanks. I need deadweight loss

[@ThinkEcon]

Glad to hear it! Here’s our deadweight loss video; kzbin.info/www/bejne/laGVg5-NnMhjoLc

[@olebengmokhatu5904]

Dead weight loss

[@ThinkEcon]

@@olebengmokhatu5904 Check out our Deadweight Loss video here: kzbin.info/www/bejne/laGVg5-NnMhjoLc

[@ibrahimathar1033]

thank you so much man, have an exam tomorrow morning and this came in clutch

[@ThinkEcon]

Glad to hear it! Good luck on the exam!

[@adeebhaider844]

Your way of teaching is so great, i really understand everything.

[@ThinkEcon]

I’m really glad to hear that! :)

[@hungnguyen-gs3oe]

thank a lot sir, you just saved my life.

[@alassanemagassouba9420]

thank you so much; your explanations are so effective and easy to understand

[@ThinkEcon]

You're very welcome! I'm really glad to hear that :)

[@hurenbegatterhans-jorg1476]

This was such a simple and straightfoward explanation, thank you:)

[@freezymedia883]

Typing from Africa specifically zambia you have just helped me do my assignment

[@ThinkEcon]

I'm glad to hear that!

[@SundaySikanyika-l3t]

Same category the man is doing the needful

[@domnicedits1268]

Zambia ku chalo

[@corigarcia4864]

too good, better than my uni profs, love love love love thank you

[@ThinkEcon]

I’m glad I could help! ☺️

[@avtomerebashvili8145]

thanks for that simpliest explanation, u saved me

[@ThinkEcon]

Glad I could help! :)

[@HibaHussain-w4i]

Thank you so much! I'm prepping for an exam and this really helped me!

[@ThinkEcon]

I’m glad to hear it! Good luck on your exam!

[@ooglyrat7010]

You saved my life honest to god 🙏🏻

[@ThinkEcon]

Glad you found the video helpful! :)

[@A4JIT]

the video is so helpful man i have economics exam today

[@ThinkEcon]

Good luck!

[@kikoferras7369]

God Bless you for this.

[@greenwaddledee1743]

Good luck on your exams yall

[@KunaiKrazy]

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]

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!

[@tylerchristensen7456]

It finally makes sense, thank you

[@cemilkolgu6579]

You are the best sir, thank you.

[@ThinkEcon]

You're very welcome!

[@owenthomas3621]

Great video

[@capoags2438]

thank you so much, your explanations are so effective and easy to understand sir

[@ThinkEcon]

Glad to hear that!

[@abrahimshorbtli9714]

Amazing explanation thank you sir 🧠

[@ThinkEcon]

You're very welcome!

[@priyanshukr.sharma2697]

this is really one of te finest explanation literally the best one

[@ThinkEcon]

I appreciate the compliment! Glad you found it helpful! :)

[@moseswamunyima3962]

Wow, you make it look easy! Thank you

[@ThinkEcon]

I’m happy to hear that. You’re very welcome! ☺️

[@stevemcgroob4446]

Dude you're a life saver. 🙏

[@akbotatoktarbekova2701]

thank you! loved it, so simple

[@ThinkEcon]

I’m glad you found it helpful!

[@Pianodaddyy]

Liked and Subscribed! Thank you for your help!!!

[@upsingh751]

superb sir ji. love from india

[@ThinkEcon]

Glad you enjoyed!

[@AuthenticallyAlysiaa]

SOOOO HELPFUL 😢😢. THANK YOU

[@ThinkEcon]

You're welcome! I'm glad you found it helpful!

[@xay8336]

Sir, where did you got the number '270' & '5P'? please help

[@ThinkEcon]

Q = 270 - 5P is the equation for the demand curve. Most of the time the specific demand equation will be given in the question.

[@BookFurnace]

It's just arbitrary numbers for this example.

[@KhimKhan]

Wow 10q man! keep it up 🎉🎉

[@TenzinNorbuLama-n9n]

Thank you for clear explanations. liked and subscribed already :)

[@ThinkEcon]

I’m glad you enjoyed the video! :)

[@phindarishasohlang910]

Please calculate consumer surplus and producer surplus using integration

[@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]

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]

@@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]

@@peacekeeper-apexlegends9294 I’m glad it’s been helpful, and appreciate the kind words :)

[@outstanding8240]

HI, the 270 and the 10 are random values that the professor has added or it is the actual base formula?

[@ThinkEcon]

Those are the actual values in this particular example. They will change question to question

[@delealabi1866]

I was bemused as to how the figures just materialized. Thanks for clearing this. @@ThinkEcon

[@ThinkEcon]

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

[@consultcmb]

Can the supply curve start from any number apart from 0?

[@ThinkEcon]

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!

[@luckytenygeay4968]

Thanks u I learn something

[@ThinkEcon]

You're welcome! I'm glad to hear that!

[@calmingarts2932]

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]

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]

@@ThinkEcon Thank you 😊

[@reepoponne]

Amazing video Thank you

[@ThinkEcon]

You're welcome!

[@tahseentasneem3296]

Thank you so much ❤it was very helpful ❤

[@ThinkEcon]

You're very welcome!

[@utkukrky698]

Thanksss ❤

[@ThinkEcon]

You’re welcome!

[@basiloriokot]

Thankyou for the knowledge

[@ryanantoun6887]

are Qd = 270 -5p and Qs = 10P equations used for every single problem?

[@ThinkEcon]

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

[@vihanga193]

so clear thanks

[@Debbie2004-x9q]

This is amazing. I understood it very well 🎉🎉🎉

[@abdihakimibrahim-so6dl]

Well done

[@ThinkEcon]

Thanks!

[@tomascorreia7055]

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]

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!

[@ahmedbusiness4702]

Very good ❤

[@Mudenda_M]

This is great👍🏾😃

[@ThinkEcon]

Thank you!

[@sherikawilliams7868]

Does the demand ad supply equation changes constantly? For in a previosu video you had a different equation for it which was Qd = 100- 3P and Qs= 2P + 20

[@izzybellz5346]

❤ love your videos, very helpful..

[@ThinkEcon]

I'm really glad to hear that! :)

[@Siyasat1]

Thank you !!

[@ThinkEcon]

You're welcome!

[@Onlineclass.101]

you saved my life.

[@ThinkEcon]

All in a day's work

[@abdallaabdullahi5942]

thank you

[@ThinkEcon]

You're welcome!

[@carlanavarrofernandez5021]

amazing video

[@ThinkEcon]

Thank you very much!

[@victoriasepiashvili]

Amazing video ❤

[@ThinkEcon]

Thank you very much :)

[@charitychiwalo3140]

thank you somuch

[@yahk3]

Very useful

[@ThinkEcon]

Glad to hear it!

[@MandilakheGqwangu]

thank you sir 🙌👏

[@ThinkEcon]

You're most welcome!

[@alishaadhikari6108]

thank you so much

[@ThinkEcon]

You're very welcome!

[@mankwongng185]

very useful !

[@ThinkEcon]

Glad to hear it!

[@ampiireliz]

Thank you❤

[@ThinkEcon]

You're welcome :)

[@vishwarana8698]

Please share video for tax subsidies and quotas on supply n demand curve calculations 😊

[@eatloaf]

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]

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?

[@syedhasanakbarzaidi]

Amazing

[@munachinweze3694]

How did you get the figures that you used for quantity supplied and quantity demanded

[@ThinkEcon]

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

[@francereale86]

gotcha!

[@vidurasampath8688]

Thanks 🇱🇰

[@ThinkEcon]

You're welcome!

[@mirzaseyab6206]

What about if demand and supply curves are not lines ? If they are quadratic...

[@dulshansenadheera3084]

Thanks for the video..

[@syndafloden333]

ure a god man

[@dollytearz]

how did u get 18 from 280= 15P

[@ThinkEcon]

I believe you mean 270 = 15P. You get 18 by dividing 15 from both sides of the equation!

[@creedancebird270]

Where did you get 15p from?

[@JosephineMulenga-ol4nt]

How is the base of the producer's supply becoming 80?

[@MbooMwanangombe]

Exallent

[@Kermitsbgc]

i don't know who needs to hear this, but chatgpt will help you study and explain math for you

[@Makbowman]

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]

It sure does

[@aaaaaaaaaaaaaaaa7498]

Inaccurate

[@AlbertChanda-oy9m]

✔️​@@aaaaaaaaaaaaaaaa7498

[@jaredcobbett6951]

@@Makbowmanthat’s amazing it apologises 😂

[@AlbertChanda-oy9m]

❤

[@derickdoh2526]

Hi Can You Help Me Find The Consumer Surplus At A Price Of $10 Given The Equations Qd=20-P and Qs= P ?

[@ThinkEcon]

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]

@@ThinkEcon Okay. I've Got Another One. Qd=30-P Qs=2P Find The Consumer Surplus At A Price Of $15

[@HumairaFaiz-xq5ze]

❤❤❤

[@AnafaEmmanuel]

Where is the 18 coming from

[@muhammadfaizinramadhantara5597]

rizky fawwaz pernah belajar disini

[@MrTIPTOE415]

How did P become 18

[@BI-km6dl]

It managed to live an additional year after its 17th birthday.

[@timothysichone4109]

He divided it by 15

[@tharangiwattuhewa1782]

Thank you

[@ThinkEcon]

You're welcome!

[@Agyeb965]

Thanks a lot

[@andrewakr7205]

Thank you!

[@ThinkEcon]

You're very welcome!

[@aminjdir9369]

Thank you

[@ThinkEcon]

You're very welcome!