The total surplus (consumer surplus plus producer surplus) is greatest when which of the following occurs? a.Producer surplus is maximized. b.Consumer surplus is maximized. c.All of these are correct d.The market is at equilibri

The total surplus (consumer surplus plus producer surplus) is greatest when which of the following occurs? a.Producer surplus is maximized. b.Consumer surplus is maximized. c.All of these are correct d.The market is at equilibri

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter7: Market Efficiency And Welfare

Section: Chapter Questions

Problem 1P

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Question

The total surplus (consumer surplus plus producer surplus) is greatest when which of the following occurs?

a.Producer surplus is maximized.

b.Consumer surplus is maximized.

c.All of these are correct

d.The market is at equilibrium.

Consumer’s gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price and up to the equilibrium quantity. Consumer surplus is represented by area A.

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