When the efficient quantity is produced
A)total consumer surplus is zero.
B)total producer surplus is zero.
C)consumer surplus exceeds producer surplus by the greatest possible amount.
D)producer surplus exceeds consumer surplus by the greatest possible amount.
E)the sum of consumer surplus and producer surplus is maximized.

Question

Quizplus · Accepted Answer

The efficient quantity is the point where marginal benefit equals marginal cost. At this point, the sum of consumer surplus (the difference between the maximum price consumers are willing to pay and the actual price) and producer surplus (the difference between the minimum price producers are willing to sell for and the actual price) is maximized. This means that both consumers and producers benefit the most from producing the efficient quantity. Therefore, the correct choice is E.

When the Efficient Quantity Is Produced