What does the seller's surplus measure?

The seller's surplus measures the difference between the price that a seller receives for a good or service and the minimum price that the seller is willing to accept, known as the seller's reservation price. This concept is crucial in understanding how much benefit or gain a seller receives from participating in a transaction. When the price received exceeds the seller's reservation price, the seller realizes additional benefit, which is captured as surplus.

In essence, seller's surplus reflects the financial advantage that sellers gain from pricing conditions and market transactions, highlighting the profit opportunity that exists above their minimum acceptable price. Thus, this metric is essential for evaluating market efficiency and seller welfare in economic analysis.