Chapter 7 Post

This chapter wasn't impossible to understand. It was about consumers, producers and the efficiency of markets. It talks about how the producing and consuming surplus affects the market. You find this amount by substracting the amount that was made from the price that people were willing to buy it. They have different graphs for this chapter, but it refers back to previous chapters. The chapter uses the demand curve to measure the consumer surplus. Each buyer has something called a willingness to pay. This willingness to pay is the buyer's maximum and it measures how much the buyer values the good. There is another thing called consumer surplus which is the amount that a buyer is willing to pay for a good minus the amount the buyer actually pays for it. This measures the benefit to buyers of participating in a market. They have graphs and charts in this chapter to help you visualize how to measure the producer surplus. This producer surplus is closely related to the supply curve (obviously). The higher price of an item raises the producer surplus. They have equations and graphs to show you how to relate the consumer surplus and the producer surplus to the market equilibrium. There are two insights about market outcomes: Free markets alleviate the supply of goods to the buyers who value them most highly, as measure by their willingness to pay. And free markets alleviate the demand for goods to the sellers who can produce them at least once.