Total consumer surplus plus producer surplus is maximized at

Question

Quizplus · Accepted Answer

At the market equilibrium price, both consumers and producers can maximize their surplus. If the price is below equilibrium, there will be a shortage and consumers will be willing to pay more, thus increasing consumer surplus but decreasing producer surplus. If the price is above equilibrium, there will be a surplus and producers will be willing to sell at a lower price, thus increasing producer surplus but decreasing consumer surplus. Therefore, the market equilibrium price is the only price where total surplus is maximized. Option D is not even valid as the price cannot be zero in a market.

Total Consumer Surplus Plus Producer Surplus Is Maximized at