If 10 000 snow tires are produced and purchased in the month of November,we can say that economic surplus is
A)the net value that society as a whole receives by producing and consuming those 10 000 snow tires.
B)the number of snow tires that are produced in excess of the equilibrium quantity.
C)the profit earned by the producers of those 10 000 snow tires.
D)the price at which the tires are sold multiplied by 10 000.
E)the net value to those consumers who purchased the 10 000 snow tires.

Question

Quizplus · Accepted Answer

Economic surplus refers to the net value that society as a whole receives by producing and consuming a certain good. In this case, the production and purchase of 10 000 snow tires in November will create economic surplus if the value that consumers place on the tires (as measured by the price they are willing to pay) is greater than the cost of production for the producers (including any external costs). This surplus can be seen as a benefit to both producers and consumers, as well as to society as a whole. It is not related to the quantity produced or sold in excess of equilibrium, the profits earned by producers, or the price at which the tires are sold, as those factors are only part of the calculation of economic surplus.

If 10 000 Snow Tires Are Produced and Purchased in the Month