Social welfare
Definition. Social welfare is the total wellbeing of all members of society, commonly measured in welfare analysis as the sum of consumer surplus and producer surplus, and adjusted for any external costs or benefits. Maximising social welfare is a central goal when assessing the efficiency of a market outcome.
Welfare is maximised at the allocatively efficient output where marginal social benefit equals marginal social cost. Market failure reduces social welfare by creating a deadweight loss relative to this ideal.
This term belongs to Rational Decision Making in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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