Total or social surplus is a sum of consumer and producer surpluses. Economic efficiency is when resources are optimally allocated to minimize waste and bring benefits from scarce resources. When social surplus increases at equilibrium quantity and price, the same situation is observed at any quantity, which demonstrates economic efficiency. In other words, the relationship between total surplus and economic efficiency is that total surplus maximization leads to the possibility for the economy to become efficient.
What is the relationship between total surplus and economic efficiency?
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Academic.Tips. (2022, September 28). What is the relationship between total surplus and economic efficiency? https://academic.tips/question/what-is-the-relationship-between-total-surplus-and-economic-efficiency/
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Academic.Tips. 2022. "What is the relationship between total surplus and economic efficiency?" September 28, 2022. https://academic.tips/question/what-is-the-relationship-between-total-surplus-and-economic-efficiency/.
1. Academic.Tips. "What is the relationship between total surplus and economic efficiency?" September 28, 2022. https://academic.tips/question/what-is-the-relationship-between-total-surplus-and-economic-efficiency/.
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