Market efficiency refers to the perfect point by which consumers and businesses’ needs are met. This is otherwise known as the equilibrium and is the area which markets tend to fluctuate towards through periods of oversupply and overdemand
The producer surplus is the difference between what the producer sells its goods for and the minimum price it would be willing to sell for. In other words, because the producer is selling at a higher price than they would accept, a ‘producer surplus’ is created.
Allocative Efficiency occurs when consumers pay exactly the marginal cost of production. In other words, businesses stop making the product when there are no further profits to be made
A deadweight loss is a loss in economic efficiency as a result of disequilibrium of supply and demand. In other words, goods and services are either being under or oversupplied to the market – leading to an economic loss to the nation.
The consumer surplus is the difference between what the consumer is willing to pay, and what they actually pay.
