If the demand curve reﬂects consumers' full willingness to pay, and the supply curve reﬂects all costs of production, then which of the following is true?
A) The beneﬁt surpluses shared between consumers and producers will be maximized.
B) The beneﬁt surpluses received by consumers and producers will be equal.
C) There will be no consumer or producer surplus.
D) Consumer surplus will be maximized, and producer surplus will be minimized.

Question

Quizplus · Accepted Answer

When the demand curve reflects consumers' willingness to pay and the supply curve reflects all costs of production, the point of equilibrium is where the quantity demanded equals the quantity supplied. At this point, the beneﬁt surpluses shared between consumers and producers will be maximized, as they are able to trade at a price where both are willing to participate in the transaction. Therefore, option A is the correct answer.

If the Demand Curve Reﬂects Consumers' Full Willingness to Pay