For an economist to say that too little of the good is produced, what must be true?
A)The consumer surplus plus the producer surplus must be smaller than it could be.
B)The consumer surplus must be smaller than optimal.
C)The consumer surplus must be larger than optimal.
D)The producer surplus must be smaller than optimal.

Question

Quizplus · Accepted Answer

When an economist says that too little of a good is produced, it implies that the total welfare (consumer surplus plus producer surplus) is not maximized. This means that the sum of consumer and producer surplus could be larger if more of the good were produced and consumed, indicating inefficiency in the market.

For an Economist to Say That Too Little of the Good