Equilibrium in a perfectly competitive market results in a quantity for which the sum of consumer and producer surpluses is maximized. How is it true? On a graph, it looks like as if the sum of both will be 0(assuming one offsets the other) for equal CS and PS. If this not the case, it will never be maximum where both are 0, but still notes say that sum is maximized where both are zero. Does anyone else think along the same lines?
It sounds like you’re looking at the supply/demand graphs as if they lie on the number line along each axis? Everything above the supply curve and up to equilibrium is the producer surplus. Everything below the demand curve and up to the demand curve is the consumer surplus. In perfect competition, quantity demanded = quantity supplied. Consequently, a price emerges which maximizes the producer’s or the consumer’s value. In perfect competition, the area covered by each triangle (consumer and producer) is maximized.
So it’s actually area. hmm then it makes sense.