In a well-functioning competitive market, total surplus equals:
A) producer surplus plus consumer surplus.
B) producer surplus minus consumer surplus.
C) consumer surplus minus producer surplus.
D) the total amount spent on a good in a market.

Question

Quizplus · Accepted Answer

In a well-functioning competitive market, total surplus is maximized and equal to the sum of consumer surplus (the difference between the price consumers are willing to pay and the market price) and producer surplus (the difference between the market price and the cost of producing the good). Therefore, choice A is the correct answer.

In a Well-Functioning Competitive Market, Total Surplus Equals