'The outward shift of the supply curve will cause producer surplus to increase from area A to area A+B+C+D.
Producer surplus is the difference between what a person is willing to accept for a given quantity of a commodity and what he would get by selling that commodity at the market price. The difference or surplus is the profit received by the producer from selling the goods on the market.
Producer surplus is a measure of producer welfare. This is represented graphically as the area above the supply curve and below the equilibrium price.
Producer surplus refers to everyone who produces at a price less than $5. Companies that produce at $5 are losing money instead of making a profit. In this example, some company producing at a cost of $2 he has a profit of $3.
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