In a competitive market when there is no deadweight loss
A)consumer surplus is minimized.
B)producer surplus is minimized.
C)consumer surplus plus producer surplus is minimized.
D)consumer surplus plus producer surplus is maximized.

Question

Quizplus · Accepted Answer

In a competitive market, the equilibrium price and quantity are determined where marginal cost equals marginal revenue. At this point, both producers and consumers are able to maximize their surplus as they are able to transact at a mutually beneficial price. Therefore, consumer surplus plus producer surplus is maximized. There is no deadweight loss as the market is operating efficiently, meaning that all gains from trade are being realized.

In a Competitive Market When There Is No Deadweight Loss