Combined the consumer surplus and producer surplus at equilibrium is
A)lower than it would be at prices below equilibrium.
B)lower than it would be at prices above equilibrium.
C)typically negative.
D)as big as it can get.

Question

Quizplus · Accepted Answer

At equilibrium, the market reaches its most efficient point where the allocation of resources maximizes the total surplus. The consumer surplus is the difference between the price that consumers are willing to pay for a good and the market price. The producer surplus is the difference between the market price and the price that producers are willing to sell the good for. At equilibrium, both the consumer and producer surplus are maximized, resulting in the total surplus being as big as it can get. Therefore, the correct answer is D.

Combined the Consumer Surplus and Producer Surplus at Equilibrium Is