What is defined as the sum of consumer surplus and producer surplus?

The correct answer is total surplus, which is defined as the sum of consumer surplus and producer surplus in a market.

Consumer surplus refers to the difference between what consumers are willing to pay for a good or service and what they actually pay. It illustrates the benefit buyers receive from purchasing a product at a lower price than they are prepared to pay.

Producer surplus, on the other hand, is the difference between what producers are willing to accept for a good or service and the price they actually receive. It represents the benefit to sellers from selling at a market price that exceeds their minimum acceptable price.

When you combine consumer surplus and producer surplus, you obtain total surplus, which is a measure of the overall economic efficiency of a market. It indicates how well resources are being allocated in the economy, representing the net benefits to society from the production and consumption of goods and services.

Market efficiency, while related, focuses more on how effectively resources are allocated rather than explicitly measuring surplus. Aggregate surplus is not a standard term used in economics, and equilibrium surplus does not accurately capture the sum of consumer and producer surplus within the established definitions. Therefore, total surplus specifically encapsulates both elements accurately, making it the correct answer.