Competitive markets produce equilibrium prices and quantities that minimize the sum of consumer and producer surpluses.

Question

Quizplus · Accepted Answer

Competitive markets produce equilibrium prices and quantities that maximize the sum of consumer and producer surpluses, not minimize. This is because at equilibrium, the market efficiently allocates resources to where they are most valued, leading to the greatest total benefit to society.

Competitive Markets Produce Equilibrium Prices and Quantities That Minimize the Sum