Consumer surplus and producer surplus are maximized at:

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay for a good or service and what they actually pay, while producer surplus is the difference between the price a producer receives for a good or service and the cost to produce it. At the market equilibrium price, both consumers and producers are satisfied and getting the most value out of the transaction, maximizing both consumer and producer surplus. Therefore, the best choice is C, the market equilibrium price. A price below or above equilibrium will result in a loss of surplus for either consumers or producers, respectively. The price of $0 is not a realistic or sustainable market price, as suppliers would not be willing to produce the good or service for free.

Consumer Surplus and Producer Surplus Are Maximized At