Chapter 7 develops the concept of efficiency and explores why many tasks are best left up to the market It presents the concept of economic surplus in detail and looks at how unregulated markets can generate the largest possible economic surplus Chapter 7: Efficiency and Exchange
Chapter 6 presents the supply side of the market using an approach parallel to that of the demand side of the market in Chapter 5. The chapter presents the material in a way that illustrates the second core principle of the textbook, that marginal benefits should equal marginal costs Chapter 5 presents the demand curve as derived from marginal benefit and Chapter 6 presents the supply curve as derived from marginal costs
1. To say that someone needs a good is to suggest that he cannot choose to do without the good or buy a substitute for it. We are more likely to be mindful of the fact that almost all goods have substitutes if we speak of wants rather than needs 2. Even though we cannot actually
1. Price changes affect quantity demanded for two reasons: They attractiveness of substitute goods and they alter the real value of the consumers purchasing power. The second effect grows larger as the share of the consumers