I think it is A & C, but am not sure..
In a perfectly competitive market in which no market failure occurs and no government policy interferes with the equilibrium price and quantity:
a. deadweight loss is zero
b. the sum of producer and consumer surplus is maximized
c. producer surplus is minimized.
d. A and C are correct
e. A and B are correct
To determine which statements are correct, let's analyze each option:
a. Deadweight loss is zero: In a perfectly competitive market with no market failure or government policy interference, deadweight loss is indeed zero. This is because the equilibrium price and quantity in a perfectly competitive market reflect the efficient allocation of resources.
b. The sum of producer and consumer surplus is maximized: In a perfectly competitive market, the sum of producer and consumer surplus is indeed maximized at the equilibrium price and quantity. This is because each buyer and seller is willing to participate voluntarily in the market, resulting in the greatest overall welfare.
c. Producer surplus is minimized: This statement is incorrect. In a perfectly competitive market, producer surplus refers to the difference between the price at which producers are willing to supply a good or service and the actual price they receive. As long as the market price is higher than the producers' costs of production, there is positive producer surplus. Therefore, producer surplus is not minimized in this scenario.
Taking these evaluations into consideration, the correct answer is option e. "A and B are correct" since both a. Deadweight loss is zero and b. The sum of producer and consumer surplus is maximized are true statements in a perfectly competitive market with no market failure or government policy interference.