Econ Lab · Welfare
Producer surplus
Same coffee market, now from behind the counter. One cafe runs so lean it would still make money selling a cup for a dollar. It sells at four like everyone else. That three-dollar gap is its reward, and the whole industry has its own version of it.
Drag the price line up and watch the sellers' winnings, the shaded triangle, grow.
Producer surplus is the sellers' side of the gains from trade. Cafes differ in cost, so the supply curve slopes up. Each cafe along it would sell for as little as its own cost, but it collects the one market price instead. The triangle between that price and the supply curve is the stack of those gaps.
This is the market price, where supply meets demand. Cafes brew cups and collect about dollars of surplus. Notice how much of that the low-cost cafes near the left of the curve earn, since their gap between cost and price is the widest. Drag the price up or down to see the triangle grow or shrink.
Drag the dashed price line, or use the slider. Higher price, bigger triangle.
The supply curve is a queue too
The supply curve sorts sellers by cost. The most efficient cafe sits at the bottom left, able to brew cheaply. The highest-cost one sits up and to the right, only just willing to make a cup at the going price. Every seller below the price line is pocketing the difference between their cost and what they receive.
A mirror of consumer surplus
This is the same idea as consumer surplus, flipped. Buyers win when the price is low, sellers win when it is high. They pull in opposite directions, which is exactly why a market needs a price that balances the two. Put both triangles together and you can finally measure the total good a market does.
What you just did
You measured the sellers' share of the gains from trade. Next you will lay it beside consumer surplus in the same figure and see why the market price, the one that balances the two, makes the combined gain as large as it can be.