The sum of consumer surplus and producer surplus is maximized at:

The sum of consumer surplus and producer surplus is maximized at the equilibrium price because this is the price at which the quantity of goods demanded by consumers equals the quantity of goods supplied by producers. At equilibrium, resources are allocated efficiently, leading to the highest overall welfare in the market.

At this price point, consumers are able to purchase goods at a price they are willing to pay, and producers are able to sell their goods for a price that covers their costs, ensuring that both groups benefit. Consumer surplus, which measures the difference between what consumers are willing to pay and what they actually pay, is maximized, as consumers can obtain goods at the lowest possible price that balances demand with supply. Likewise, producer surplus, the difference between the price producers receive and the minimum price they would accept, is also maximized at the equilibrium because producers can sell all the goods they are willing to produce without excess supply or unmet demand.

When a price ceiling is imposed, it can lead to shortages, reducing the amount of consumer surplus because some consumers who are willing to pay more cannot find the good in the market. On the other hand, a price floor, set above equilibrium price, can lead to surpluses where prices are artificially high, causing excess supply and