An exchange between a buyer and seller occurs usually when the exchange creates both a consumer surplus and a supplier surplus. Market efficiency occurs when consumer and supplier surplus are maximized. However, in exchanges between buyers and sellers, should society be only concerned with market efficiency? For this discussion, answer the following questions.

1. Describe a personal experience of when you purchased a product or service whereby you feel you experienced surplus as a consumer. To answer this question, a) State the purchase you made and then b) why this is an example of consumer surplus. Clearly identify your responses as 1a) and then 1 b).
2. The lesson notes describe both positive and negative externalities. An interesting situation occurs when there is a positive externality. This is interesting because economists state this is a result of market inefficiency or failure. Combine the lesson notes with some of your own research and your own experiences to describe when you were part of a transaction that resulted in a positive externality and why the transaction would be considered inefficient. To answer this question, a) describe the transaction, b) describe the positive externality, and c) state why, from an economist's viewpoint, this would be considered market inefficiency.