Chapter 7: Consumers, Producers, and the Efficiency of Markets

Chapter 7 was one of the easier chapters to read and follow along. This chapter is divided into three main concepts all relevant to the needs and willingness of the buyer/seller. The concepts are buyer surplus, producer surplus, and market efficiency. Quickly seen, buyer and seller surplus are extremely alike and they have similar forms of finding the total surplus. Another thing the chapter talks about is how the free competitive market produces efficiency and not so much equity. In the book, the reason for not including equity right now is because the social planner is only focusing on the efficiency of the seller/buyer. Now that I mention the idea of the social planner, the term “invisible hand” is also brought back to explain how the market balances out. At the end of the chapter, the concluding paragraph introduces the terms of market failure from externalities and market power. In the end, I think that a quick summary or further explanation of the 3 insights of market outcomes would be beneficial to understand the overall concept. I would like a better explanation of this because I was confused a bit about the purpose behind it and what they were saying. In conclusion, I would give the chapter a rating of 2.5 since it was an easy read but there was still some questions behind the meanings.