How does a PC power supply actually work?

Lets say I have a 400 watt power supply. And I have a 400 watt video card, 50 watt motherboard and 100 watt processor. That makes 550 watt. Right? So does that mean that my 400 watt power supply can't handle it and I need to buy a new power supply or will everything be OK because it's all 400 watt or under.
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