Exhibit 7-2
-The sum of producer and consumer surplus is maximized when
A)the difference between marginal benefit and marginal cost is at its maximum.
B)producers produce at the point where marginal cost is equal to zero.
C)equity is achieved.
D)consumers buy to the point that marginal benefit is equal to zero.
E)marginal benefit and marginal cost are equal.

Question

Exhibit 7-2 
-The sum of producer and consumer surplus is maximized when
A)the difference between marginal benefit and marginal cost is at its maximum. 
B)producers produce at the point where marginal cost is equal to zero. 
C)equity is achieved. 
D)consumers buy to the point that marginal benefit is equal to zero. 
E)marginal benefit and marginal cost are equal.

Quizplus · Accepted Answer

The sum of producer and consumer surplus is maximized when the market is in equilibrium, which occurs when marginal benefit (the value consumers place on an additional unit of a good) equals marginal cost (the cost to produce an additional unit). This condition ensures that resources are allocated efficiently, maximizing the total welfare in the economy.

Exhibit 7-2 -The Sum of Producer and Consumer Surplus Is Maximized When