Economic welfare
Definition. Economic welfare refers to the level of wellbeing or satisfaction that society derives from the production and consumption of goods and services. In market analysis it is measured by total surplus, the sum of consumer surplus and producer surplus, which is maximised at the allocatively efficient equilibrium output.
Consumer surplus is the gap between what buyers are willing to pay and the price paid, while producer surplus is the gap between the price received and the minimum sellers would accept.
This term belongs to Consumer and Producer Surplus in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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