Chapter 7

Chapter 7 covered markets and welfare; it discussed how to see a market via the surpluses from consumers and sellers. The chapter overall was easy to understand but I think just practicing the graphs and getting a hang for everything would be useful. The money that consumers are willing to pay for their goods minus the money they actually pay for their good is called a consumer surplus, initially measuring the amount they save, or their “bargain.” The money sellers make minus the amount they were willing to give their good for is the producer surplus, showing the amount they gain. A large surplus, from both consumers and producers, demonstrates a good measure of economic well-being. In a free market, the buys who are willing to spend the most will always be included in the market, and the sellers willing to sell the goods for the cheapest will also always be included in the market. A perfect free market will have a lot of surplus from both sides, will have reached a natural equilibrium, and most at attempts are equalizing the market will disrupt this system. A market should be left alone to find its own equilibrium in most cases and will usually find its most efficient manner. The concepts in the chapter were very tangible and understandable.