When efficiency is attained,the consumer surplus
A) must be larger than the producer surplus.
B) must be smaller than the producer surplus.
C) must equal the producer surplus.
D) can be either smaller than or larger than but cannot equal the producer surplus.
E) can be smaller than, equal to, or larger than the producer surplus.

Question

Quizplus · Accepted Answer

When efficiency is attained, the distribution of surplus between consumers and producers can vary widely. The consumer surplus can be larger than, equal to, or smaller than the producer surplus depending on the market conditions, price elasticity of demand, price elasticity of supply, and other factors. There is no rule that dictates the relative sizes of consumer and producer surplus in an efficient market.

When Efficiency Is Attained,the Consumer Surplus