Figure 15-15
-Refer to Figure 15-15. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?
A)Q = 30 and P = 30
B)Q = 30 and P = 60
C)Q = 45 and P = 45
D)Q = 60 and P = 30

Question

Figure 15-15 
-Refer to Figure 15-15. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?
A)Q = 30 and P = 30 
B)Q = 30 and P = 60 
C)Q = 45 and P = 45 
D)Q = 60 and P = 30

Quizplus · Accepted Answer

To maximize total surplus, a benevolent social planner would choose the outcome where the sum of consumer surplus and producer surplus is the greatest. In this case, that occurs at point C where quantity is 45 and price is 45. At this point, consumer surplus is the blue triangle above the price line and below the demand curve, while producer surplus is the orange triangle below the price line and above the supply curve. The total surplus is the sum of these two triangles. At point C, the total surplus is maximized.

Figure 15-15 -Refer to Figure 15-15. to Maximize Total Surplus, a Benevolent