Examlex
When charging two objects by rubbing them together:
Allocative Efficiency
A state of resource allocation where resources are distributed according to consumer preferences, leading to optimal production levels and pricing.
Corrective Tax
A tax designed to encourage private decision makers to take into account the social costs that arise from a negative externality.
Allocative Efficiency
A state where resources are allocated in a way that maximizes the net benefit to society, with products being produced at a quantity where the price equals marginal cost.
Consumer Surplus
The contrast between the total payment consumers are willing and financially able to make for a good or service and the amount they truly pay.
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