A socially optimal price maximizes ________.

Question

Quizplus · Accepted Answer

A socially optimal price is one that maximizes total surplus, which is the sum of consumer and producer surplus. This price ensures that resources are allocated efficiently and all gains from trade are realized. Choices A and B only maximize one type of surplus while ignoring the other, which does not lead to an optimal outcome. Deadweight loss is a measure of efficiency loss and is not maximized; it is minimized at the socially optimal price.

A Socially Optimal Price Maximizes ________