Social Efficiency
Definition
Social Efficiency occurs when resources are allocated in such a way that maximizes overall societal welfare. It is achieved when the Marginal Social Benefit equals the Marginal Social Cost, resulting in an optimal allocation of resources.
Analogy
Imagine a group project where everyone contributes their skills and efforts equally. Each person's contribution is valued and utilized to its fullest potential, leading to a successful outcome. Social Efficiency is like achieving the perfect balance where everyone's input is optimized for the benefit of the whole group.
Related terms
Market Failure: A situation where the market fails to allocate resources efficiently, resulting in an inefficient outcome.
Deadweight Loss: The loss of economic efficiency that occurs when resources are not allocated optimally.
Pareto Efficiency: An allocation of resources where it is impossible to make any individual better off without making someone else worse off.
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