Economic surplus is maximized in a competitive market when
A)demand is equal to supply.
B)the deadweight loss equals the sum of consumer surplus and producer surplus.
C)marginal benefit equals marginal cost.
D)producers sell the quantity that consumers are willing to buy.

Question

Quizplus · Accepted Answer

Economic surplus is maximized in a competitive market when the marginal benefit (the maximum price consumers are willing to pay for a good) equals the marginal cost (the minimum price that producers are willing to accept to produce that good). At this quantity, both consumers and producers are maximizing their individual surpluses, leading to the maximization of social welfare, which is the sum of consumer and producer surplus. Therefore, option C is the correct choice.

Economic Surplus Is Maximized in a Competitive Market When