When efficiency is attained,the sum of the total amount of consumer surplus and producer surplus is
A) minimized.
B) maximized.
C) equal to the deadweight loss.
D) undefined.
E) equal to zero.

Question

Quizplus · Accepted Answer

Efficiency is achieved when the market reaches equilibrium, where the quantity demanded equals the quantity supplied. At this point, the total amount of consumer surplus and producer surplus is at its maximum. This is because consumers are willing to pay up to their maximum willingness to pay, and producers are willing to sell up to their minimum willingness to sell. Any additional units beyond this point would result in negative surplus for either the consumers or producers. Thus, when efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is maximized.

When Efficiency Is Attained,the Sum of the Total Amount of Consumer