Chapter 7 Reflection

1.  Describe efficiency from the perspective of an economist.

From the view of an economist, efficiency can be described as a statistic of the total surplus received by everyone in the economy.

2. Why are producer and consumer surpluses important in determining market equilibrium?

Producer and consumer surpluses are very important in determining the market equilibrium because if the producer surplus is higher than consumer surplus, then the producers are benefiting and it is unfair to the consumers. the market is at equilibrium when producer surplus and consumer surplus are even.

3.  Should market efficiency always be the goal of policy setters?  Why or why not? Is there a trade-off between efficiency and equality? If you don’t like efficiency what is your preferred alternative?

Market efficiency should always be the goal of policy setters. This is because having an efficient market will make sure everyone is benefited evenly from trade. The total surplus received by everybody is the same when market efficiency is achieved.

There is a trade-off between efficiency and equality, efficiency is better for an economy. Equality is viewed as distributing economic prosperity uniformly. That is not a good way of distributing economic prosperity. It is better to let the everyones surplus be the same because from everybody’s own perspective, everyone is benefiting when the market is efficient.