Social Welfare (SW) is defined as the sum of the producer surplus (PS) and the consumer surplus (CS) under specific market conditions. This particular measure of the social welfare assigns equal value to the well-being of consumers and producers.
Explanation
Suppose that in the market for plastic utensils the consumer surplus is realized to be $2780 and the producer surplus is found to be $3510,
Social Welfare (SW) = $2780 + $3510
Then social welfare would be equal to $6290
Social welfare is found to be maximized under perfectly competitive markets. When the output deviates in nay direction from that of the equilibrium found under perfect competition, social welfare will fall.
References
Perloff, Jeffrey. Microeconomics. Boston, MA: Pearson Education, 2011. Print.