community surplus is maximized (i.e. Pareto optimality is achieved) when: a market is in equilibrium. the producer surplus is greater than the consumer surplus. a market is imperfectly competitive (e.g. a monopoly). a price floor is established.

community surplus is maximized (i.e. Pareto optimality is achieved) when: a market is in equilibrium. the producer surplus is greater than the consumer surplus. a market is imperfectly competitive (e.g. a monopoly). a price floor is established.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter3: Market Demand And Supply

Section3.A: Consumer Surplus, Proudcer Suplus, And Market Efficency

Problem 1SQ

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Concept explainers

Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without cutting down another product’s production level. This occurrence is an outcome of production happening alongside a Production Possibility Frontier (PPF).

Question

community surplus is maximized (i.e. Pareto optimality is achieved) when:

a market is in equilibrium.

the producer surplus is greater than the consumer surplus.

a market is imperfectly competitive (e.g. a monopoly).

a price floor is established.

Definition Definition Producer’s gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price and up to the equilibrium quantity.

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