Micro-Economics

How does market equilibrium maximize total surplus? (4)

1) Market equilibrium allocates consumption of the good to the potential buyers who value it the most, as indicated by the fact that they have the highest willingness to pay
 
2) It allocates sales to the potential sellers who most value the right to sell the good, as indicated by the fact that they have the lowest cost
 
3) It ensures that every customer who makes a purchase values the good more than every seller who makes a sale, so that all transactions are mutually beneficial
 
4) It ensures that every potential buyer who doesn’t make a purchase, values the good less than every potential seller who doesn't make a sale, so that no mutually beneficial transactions are missed. 
 
 

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