When markets reach the equilibrium price,all the opportunities for mutually beneficial trade have taken place.What can be said of the sum of consumer and producer surplus at this point?

Question

Quizplus · Accepted Answer

At equilibrium price, the consumer and producer surplus are maximized. This is because, at this price, the quantity supplied by producers is equal to the quantity demanded by consumers, which means that all mutually beneficial trades have been made. The consumer surplus is the difference between the highest price a consumer is willing to pay and the price they actually pay. Similarly, the producer surplus is the difference between the lowest price a producer is willing to accept and the price they actually receive. At equilibrium price, both of these surpluses are maximized, leading to overall maximum surplus. Therefore, Option D is correct.

When Markets Reach the Equilibrium Price,all the Opportunities for Mutually