When the price of a good or service is low enough, it will encourage consumers to buy. However, the price also has to be high enough to encourage producers to sell. In this way, both parties benefit from the sale. In order to calculate producer surplus, sellers must understand their direct costs and their costs, while consumers must consider their _price based on the value they place on a particular good or service.

It should be noted that when prices are low, consumers would actually want to buy more of the goods while the producers will want to sell less and only wants to sell more and supply more when price rises.

In order to calculate producer surplus, sellers must understand their direct costs and their opportunity costs because during production, the explicit and implicit cost are borne by the producer and the implicit cost has ti do with what the producer gives up during production process, so it must be taken into consideration.

Consumers must consider their reservation price based on the value they place on a particular good or service. The reservation price is the maximum amount that a consumer wan to pay for a good and once the reservation price is higher than the price of the good, the consumer will buy such good.