Question
3. In a perfectly competitive market equilibrium where quantity demanded equals quantity supplied the SUM of consumer surplus and producer surplus is maximum. (a) Does
3. In a perfectly competitive market equilibrium where quantity demanded equals quantity supplied the SUM of consumer surplus and producer surplus is maximum. (a) Does this also imply that both the consumer and the producer surplus are also maximum? Why or why not? (b) Is it true that at this equilibrium no one can be made better off without making someone else worse off? Explain why or why not? (c) Why, whenever there is some deadweight loss, the resource allocation is not efficient- meaning someone CAN be made better off without making anyone else worse off?
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