Chapter 7

Chapter 7 had a lot of focus on both consumers and producers, introducing the new ideas of consumer surplus and producer surplus. With consumer surplus, people willing to buy a good at a certain price but are able to buy it for less causes a surplus for them, as they save on money that they were willing to spend. The lower the price and the higher they're willing to pay, the more surplus the consumer has. While consumer surplus is related to demand curves, producers are related to supply curves, and instead of maximum willingness to buy something, they instead use the lowest price to do a certain job based on how much they would get and are willing to get. For producers, a higher price means more surplus as they will get more money based on how much the job will pay them. This causes the two sides to clash in a way, to find the best possible place for both consumers and producers to be happy. The market, at it's best, will find a way to maximize total surplus for both sides, needing to find the most efficient allocation of resources to do so. And, in reality, it also has to have a focus on equity so that more people have a chance to get the good if they want to. With this in mind, the idea of centrally planned economies usually don't work because of the vast amounts of information to try to appeal to everyone, and should usually be left alone to find the equilibrium point.