The net gain to society from the operation of a competitive market in equilibrium is
A)consumer surplus only.
B)producer surplus only.
C)the sum of consumer surplus and producer surplus.
D)the profits of the producers.

Question

Quizplus · Accepted Answer

The net gain to society from the operation of a competitive market in equilibrium is the sum of consumer surplus and producer surplus. Consumer surplus is the difference between the price consumers are willing to pay and the actual price they pay. Producer surplus is the difference between the price producers receive and the minimum price they are willing to accept. Therefore, the sum of these two surpluses represents the total economic welfare gained by society from the market.

The Net Gain to Society from the Operation of a Competitive