Question

What is the difference between producer surplus and economic profits? Please answer the question fully and in detail for a rating. Thank you.

Answer 1

The main difference between producer surplus and economic profit is fixed costs, the production costs which do not vary when the quantity is changed (i.e. rent, purchase of equipment). Economic benefit subtracts fixed costs while surplus outputs do not.

Simply put, economic benefit can not occur in isolation. From a strictly monetary viewpoint, and from a macro balance sheet viewpoint, when one earns, another has to lose monetarily. Whether the household sector or the government sector will run a deficit for the entire business sector to benefit. The production of economic gains operates under the contract and real estate law scheme.

Surplus producers, like surplus sharing agreements (more like the Eastern ideology), work in isolation, such as a fruit tree, livestock etc. Surpluses are created everywhere in isolation from any and all other activities and connections. Even the use of a solar panel which could produce a surplus if not treated as private property or for commercial purposes. A crucial element in surplus sharing agreements that generate surpluses is that the use of capital in such a scheme can not be capital from the economy Such relationships may be founded on the law of trust but never on contract law

A developing economy that continues to pursue economic growth is like an adult who never stops physically rising, so by the time the age of 40 is 30 meters high and consumes so much in comparison. One is based on the capitalist model of 'economic gain' for those who naturally gravitate for the purpose of acquiring private property against competition, industry, enterprise etc. Protection can only come for these people through the accumulation of private property, and this is becoming all the more important in a capitalist world as we have today