What Is Surplus: Definition & Economic Significance

By Catherine Brock – Updated Jul 5, 2025 at 5:43 PM EST

Key Points

Budget surpluses occur when income exceeds expenses in any budget.
Economic surplus arises when supply outstrips demand, lowering prices.
Producer surplus increases with cost reductions from technology or scale.

Surplus is a synonym for oversupply -- the word refers to an excess of something, such as money or product. In the context of economics, however, surplus has a more specific definition and significance. Let's explore the surplus concept generally, how it applies in the economy, and the effects that economic surpluses can have on your daily life.

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Racks of clothing showing a sale of 80 percent off. — Image source: Getty Images.

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About the Author

Catherine grew up in Southern California wearing a lot of black and trying to perfect the art of sarcasm. Prior to joining The Fool as a contract writer, Catherine was climbing the corporate ladder in marketing roles and dabbling in too many side hustles. When she's not writing, she can be found riding a horse in the country or shopping online for clothes.

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