Economic Efficiency

• Allocative Efficiency is defined as a level of production that maximises the total net social benefits of a commodity.
• Consumer sovereignty is the idea that consumers ultimately determine what goods and services are produced and how the economy's limited resources are used based on the purchases they make.
• Consumer surplus is the difference between what consumers are willing and able to pay for each unit of a good and the actual price of the good.
• Producer surplus is the difference between the actual price received by producers and the minimum price that they are willing and able to accept for each successive unit of the good supplied, which is the marginal cost.