In a perfectly competitive market, consumer surplus and producer surplus are equal.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, consumer surplus and producer surplus are not necessarily equal. Consumer surplus is the difference between what consumers are willing to pay and what they actually pay, while producer surplus is the difference between what producers are willing to accept for a good or service and the price they actually receive. The distribution of surplus depends on market conditions, including demand and supply elasticities, and not on the type of market structure per se.

In a Perfectly Competitive Market, Consumer Surplus and Producer Surplus