Economists claim that measuring society's welfare as CS + PS
A) is inappropriate since ultimately everyone is a consumer.
B) is valid only when the same person could be either a consumer or a producer.
C) treats the gains to consumers and producers equally.
D) is not commonly accepted.

Question

Quizplus · Accepted Answer

Measuring society's welfare as the sum of consumer surplus and producer surplus treats the gains to consumers and producers equally. This approach is based on the idea of Pareto Efficiency, in which an allocation of resources is considered efficient if it is impossible to make anyone better off without making someone else worse off. In this context, the sum of consumer surplus and producer surplus represents the maximum level of welfare that can be achieved without any trade-offs between different groups.

Economists Claim That Measuring Society's Welfare as CS + PS