Chapter 7 defined consumer and producer surplus and then used these tools to evaluate the efficiency of free markets. A consumer surplus measures the willingness of the buyer to pay for a certain good, while a producer surplus measures the willingness to sell a certain good. These tools were used to show free markets are the most efficient choice for a number of reasons: free markets allocate the supply of goods to the buyers and sellers with a higher willingness and the quantity of goods produced maximizes the total surplus.
I thought this chapter was pretty well paced, stopping to explain concepts that would otherwise be frustrating. I appreciate the graphs and examples comparing one condition to the other (like a price drop or raise). I also thought the section on an organ market was extremely interesting. I agree that it is fair to sell/trade organs with ones consent because not everyone is born with a healthy liver. However, price does pose a problem because someone will definitely not sell their organ for cheap but it promotes inequality between the rich and poor.
Some questions I have for this chapter are:
How is consumer and producer surplus measures on a larger scale? It seems hard to quantify willingness.
How exactly do market powers and externalities affect the market?
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