Question:
In a competitive market, economic surplus is maximized when the:
(1) quantity supplied equals the quantity demanded.
(2) quantity supplied exceeds the quantity demanded.
(3) quantity demanded exceeds the quantity supplied.
(4) price is set below the equilibrium price.
(5) price is set above the equilibrium price.
Correct Answer:
(1)
Answer Explanation:
Economic surplus (total welfare of society) is maximized at the market equilibrium, which occurs exactly where the quantity supplied equals the quantity demanded, achieving allocative efficiency.
Topic: Consumer Surplus Year: 2023
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