Suppose that a perfectly competitive market is in equilibrium.Then,
A)the equilibrium quantity provides the maximum possible benefit to buyers
B)the equilibrium quantity provides the maximum possible benefit to buyers and sellers combined
C)total (producer + consumer)surplus is equal to price x quantity.
D)an additional unit,if produced,would produce a benefit that exceeds its cost of production
E)an additional unit could be produced at a cost to some producer that is less than the benefit to some consumer

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the equilibrium quantity not only provides the maximum possible benefit to buyers but also to sellers, hence it provides the maximum possible benefit to both combined. Total surplus in a perfectly competitive market is the sum of consumer surplus and producer surplus, which is at its maximum at the equilibrium point. Therefore, B is the correct answer. A, C, D, E are not correct statements as they do not cover the entire concept of a perfectly competitive market equilibrium.

Suppose That a Perfectly Competitive Market Is in Equilibrium