Final answer:
The maximum economic surplus occurs when the price is set at the equilibrium point in a market. This is when supply equals demand, leading to the most efficient allocation of resources and benefit for both consumers and producers.
Step-by-step explanation:
Following the rational rule, the maximum economic surplus occurs when the price is set at the equilibrium. The equilibrium price is where the supply and demand curves intersect, and at this point, the quantity supplied is equal to the quantity demanded. When the market is in equilibrium, there is neither excess supply (surplus) nor excess demand (shortage), resulting in the most efficient distribution of resources and maximum economic surplus for both producers and consumers.
In cases where the price is set below the equilibrium, there is excess demand, leading to a shortage. Conversely, if the price is set above the equilibrium, there is excess supply, leading to a surplus. These scenarios move the market away from its most efficient point and decrease the overall economic surplus.