At an efficient market outcome,
A) total consumer surplus is zero.
B) total producer surplus is zero.
C) consumer surplus exceeds producer surplus by the greatest possible amount.
D) producer surplus exceeds consumer surplus by the greatest possible amount.
E) consumer surplus plus producer surplus is maximized.

Question

Quizplus · Accepted Answer

At an efficient market outcome, consumer surplus plus producer surplus is maximized. This is because the market has found the equilibrium price and quantity at which the marginal benefit equals the marginal cost, resulting in the greatest overall welfare for both consumers and producers. Choices A, B, C, and D are all incorrect as they represent an inefficient market outcome.

At an Efficient Market Outcome