The Net Present Value (NPV) is used to evaluate a project’s financial viability. In project management, the financial gain from a project is a tangible benefit, and NPV help measures this benefit. During the feasibility study, it will be computed, and the results will be incorporated into the business case. Return on investment (ROI), Internal …
Definition: Economic surplus is the sum of the producer surplus and the consumer surplus. It shows the benefits for all involved parties. This economic metric helps evaluate the market’s health. Economic surplus follows the rule of supply and demand. Businesses want to sell products at a higher price to earn more profit without alienating buyers, …
Consumer surplus, also known as buyer’s surplus, measures the economic benefit of a certain product’s price to consumers. It occurs when consumers pay less for a product than the maximum price they are willing to pay. Consumer surplus increases as the price of the product fall and decreases as the price rises. Consumer’s Surplus = …
In a producer surplus, businesses sell the product at a higher price than they are willing to sell. For example, the cost of a product is 10 USD, and the company is willing to sell it at 12 USD, but they decide to sell it at 15 USD. In this case, the producer surplus of …