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

Question

Quizplus · Accepted Answer

Efficiency is attained when the market reaches equilibrium where the marginal benefit equals the marginal cost. At this point, the sum of consumer surplus (the difference between the maximum price consumers are willing to pay and the market price) and producer surplus (the difference between the minimum price producers are willing to accept and the market price) is maximized, indicating that both consumers and producers are benefiting from the exchange. Therefore, the correct answer is (D) maximised.

When Efficiency Is Attained, the Sum of the Total Amount