Efficiency occurs in a market when
A) consumer surplus is greater than producer surplus.
B) total revenue is maximised.
C) consumer surplus is equal to producer surplus.
D) the sum of consumer surplus and producer surplus is maximised.
E) consumer surplus is less than producer surplus.

Question

Quizplus · Accepted Answer

Efficiency in a market occurs when the sum of consumer surplus and producer surplus is maximized. This means that there is no way to make someone better off without making someone else worse off. It is the point where the marginal benefit and marginal cost are equal and all gains from trade have been realized. Therefore, option D is the correct choice.

Efficiency Occurs in a Market When