The sum of consumer surplus and producer surplus is equal to
A)the deadweight loss.
B)the economic surplus.
C)zero.
D)total profit.

Question

Quizplus · Accepted Answer

The sum of consumer surplus and producer surplus is known as economic surplus or total surplus. It represents the net benefit to society from producing and consuming a good or service. It is calculated as the difference between the total value consumers place on the good (measured by their willingness to pay) and the total cost of producing the good (including the opportunity cost of the resources used). Thus, the economic surplus is the maximum amount that could be paid to suppliers while still leaving consumers as well off as they were before, or alternatively, the maximum amount that consumers are willing to pay while still leaving suppliers as well off as they were before.

The Sum of Consumer Surplus and Producer Surplus Is Equal