In general, the sum of consumer and producer surplus is maximized under the conditions of
A) perfect competition.
B) monopoly.
C) any market structure.
D) oligopoly.
E) monopolistic competition.

Question

Quizplus · Accepted Answer

In perfect competition, both producers and consumers have no market power to influence prices. Therefore, the market price and quantity are determined by the intersection of the supply and demand curves, resulting in a maximization of the total surplus (consumer and producer surplus combined). In other market structures such as monopoly, oligopoly, and monopolistic competition, there is some degree of market power which can lead to a decrease in total surplus.

In General, the Sum of Consumer and Producer Surplus Is