Consumer & Producer Surplus explained | Economics 100 - Cheat Sheet 📚

Added: 2026-05-22

[00:00:00]When Nike releases a new Air Jordan Retro, the retail price is set in advance, often around 200 US dollars.

[00:00:06]The number of pairs is finite. The number of buyers wanting them is many multiples of that number. Nike could raise the price. They choose not to. The result is one of the most studied price gaps in modern retail. Within minutes of a release, the same pair appears on StockX, the Detroit-based marketplace founded in 2015 by Dan Gilbert and Josh Luber.

[00:00:28]A Travis Scott Air Jordan one that retailed at 180 dollars trades at 1,500. A Dior Air Jordan that retailed at 2,000 trades at 6,000. The reseller who flipped them captured the gap a second time over.

[00:00:43]Two different parties in the same transaction had been getting a deal that was not visible at the cash register.

[00:00:48]The fan who scored a pair below market value walked away with hundreds of dollars in extra value. Nike, as a producer, sold its inventory at a price that comfortably covered its costs. Both sides got more than they would have settled for. Resale platforms simply made the second side of that gap visible. When buyers pay less than they would have been willing to pay, the difference is what economists call consumer surplus. When sellers receive more than they would have been willing to accept, the difference is producer surplus. Nike could have raised retail prices to capture the gap, but found that the line of fans willing to camp out, the cult around limited drops, was worth more to the brand than the dollars left on the table. The surplus was the brand strategy.