Socially Optimal Point

Definition

The socially optimal point is the allocation of goods and services that maximizes total surplus, where marginal benefit equals marginal cost.

Related terms

Deadweight Loss: Deadweight loss occurs when resources are not allocated at the socially optimal point, resulting in economic inefficiency and a loss of total surplus.

Marginal Benefit: Marginal benefit refers to the additional satisfaction or utility gained from consuming one more unit of a good or service.

Marginal Cost: Marginal cost represents the additional cost incurred from producing one more unit of a good or service.