Describe efficiency from the perspective of an economist.
Economist think of efficiency as when all resources are being properly allocated to maximize the surplus to society. It is known to be inefficient when potential gains between buyers and sellers are not being realized. The economy is efficient when goods are at the lowest cost. One side, buyer or seller, cannot be helped without making another worse off.
Why are producer and consumer surpluses important in determining market equilibrium?
Knowing how to calculate both consumer and producer surplus and how they shift the supply and demand curves will help determine market equilibrium.
Should market efficiency always be the goal of policy setters? Why or why not? What might an alternative be?
I do not think that efficiency should be a goal of policy setters. While it might look good when they write up the policy on paper, it is unlikely that it will all happen the way it was written up. Having a policy to make a economy efficient does not seem like a good idea. Alternatively, I think they should focus on equality as a policy. There can be written rules to make sure there is equality with prices.
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