Question

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which:____.
A. he sum of the benefits to firms is equal to the sum of the benefits to consumers.
B. Economic surplus is minimized.
C. The sum of consumer surplus and producer surplus is at a maximum.
D. The sum of consumer surplus and producer surplus is minimized.

Answer 1

Answer:

C. The sum of consumer surplus and producer surplus is at a maximum.

Explanation:

Consumers surplus is the difference between the willingness to pay of a consumer and the price the consumer pays for a good.

Producer surplus is the difference between the price of a good and the least amount he would be willing to sell his product.

Economic efficiency is where both consumer and producer surplus are maximised.

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