Measuring society's welfare as 2*CS + 0.5*PS
A) gives heavier weight to consumer gains.
B) gives heavier weight to producer gains.
C) treats the gains to consumers and producers equally.
D) treats gains and losses with different weight.

Question

Quizplus · Accepted Answer

The formula weights consumer surplus (CS) twice as heavily as producer surplus (PS). This suggests that the measure is more concerned with the welfare of consumers than producers.

Measuring Society's Welfare as 2*CS + 0.5*PS

Measuring Society's Welfare as 2CS + 0.5PS