# Market Efficiency > [!question] > > - Are free markets the best way to distribute society's resources? > - How do we measure consumer/producer welfare? - How happy people are when they buy products? - What about the stupid products? Will the society be better off if these money go into charity? - Donate kidney for her son to be on top of the list? For her son's school? For a new car? - We need to measure welfare in dollars - [[economic-policy|Government intervention]] ## Consumer Surplus > [!tip] Definition Consumer Surplus = Willingness to Pay (WTP) - Price (P) > > - Demand curve = how much consumers are willing to pay at each price, a measurement of willingness > - Consumer Surplus = Area under the demand curve and above the price ## Producer Surplus > [!tip] Definition Producer Surplus = Price (P) - Willingness to Sell (WTS) > > - WTS covers the cost > - Supply Curve = a measure of the WTS > - Producer Surplus = Area under the price and above the supply curve ## Total Surplus Moving the quantity, no matter to the left or to the right of the equilibrium point, less total surplus/welfare is obtained!