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Market Efficiency and Welfare — Principles of Macroeconomics — Kynotic Academy
Ch 6
Market Efficiency and Welfare
13 min
When you buy a slice of pizza for 5, that extra $2 of satisfaction feels like a win. Economists call that feeling consumer surplus. It turns out to be a powerful tool for judging how well markets work. In this chapter, we’ll measure the total benefits markets create. We’ll see why, under the right conditions, the back-and-forth of buyers and sellers leads to an efficient outcome.