The branch of economics under which the interrelationship between economic activities and social welfare is studied is called welfare economics. Under welfare economics, human welfare is assessed at the level of the entire economy using microeconomic techniques.
Welfare economics emphasizes on the optimal allocation of resources and goods among people so that the goals of social welfare are met. can be ensured. It is directly related to the distribution of income and the welfare of the general public.
It is assumed that, if all consumers, all producers and employers can allocate the means of production optimally. If possible, maximum welfare of the society can be ensured.