Which of the following best explains how the assembly line benefits the economy?

• A. It leads to market inefficiency by limiting output.
• B. It decreases producer surplus by increasing labor costs.
• C. It increases economic surplus by improving production efficiency and lowering costs.
• D. It reduces consumer surplus by making products more expensive.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of economic surplus, which is the sum of consumer surplus and producer surplus, representing the total benefit to society from production and consumption.
2. Step 2: Recognize that an assembly line improves production efficiency by allowing goods to be produced faster and at a lower cost per unit.
3. Step 3: Analyze how lower production costs can lead to lower prices for consumers, which increases consumer surplus, and higher producer surplus due to more efficient production.
4. Step 4: Evaluate the impact on market efficiency, noting that improved efficiency typically leads to an increase in total economic surplus rather than a decrease.
5. Step 5: Conclude that the assembly line benefits the economy by increasing economic surplus through improved production efficiency and reduced costs, which aligns with the correct answer.