A Pareto-optimal allocation is one in which the sum of the consumer surplus and the producer surplus is

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Pareto-optimal allocation is a situation where it is not possible to make one individual better off without making another individual worse off. In other words, it is a situation where resources are allocated such that no one can be made better off without making someone else worse off. As a result, Pareto-optimal allocation maximizes social welfare, which is measured as the sum of producer and consumer surplus. Therefore, the best choice is B, which states that the sum of consumer and producer surplus is maximized.

A Pareto-Optimal Allocation Is One in Which the Sum of the Consumer