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Allocative Efficiency
A state of the economy in which production represents consumer preferences; every good or service is distributed to meet the desires of consumers.
Consumer Surplus
Consumer surplus is the difference between the total amount that consumers are willing and able to pay for a good or service versus the total amount that they actually do pay.
Producer Surplus
The difference between what producers are willing to accept for a good or service versus what they actually receive, typically measured as the area above the supply curve and below the market price.
Marginal Benefit
The heightened satisfaction or usefulness derived from the consumption of an extra unit of a good or service.
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