Asked by Sydney Ghanayem on May 04, 2024
Verified
The total of producer and consumer surplus is maximized when there is overproduction.
Producer Surplus
The difference between the amount producers are willing to supply goods for and the actual amount they receive by selling them.
Overproduction
The situation where more goods are produced than can be sold, leading to excess supply and often a drop in prices.
- Comprehend the notion and consequences of achieving market equilibrium in optimizing total surplus.
Verified Answer
LG
Lindsay GilbertMay 07, 2024
Final Answer :
False
Explanation :
The total of producer and consumer surplus is maximized at the equilibrium point where supply equals demand, not in situations of overproduction. Overproduction typically leads to a surplus of goods, which can lower prices and reduce producer surplus.
Learning Objectives
- Comprehend the notion and consequences of achieving market equilibrium in optimizing total surplus.