The document discusses the concepts of equity and efficiency in economics. It defines equity as fairness in how a society's production or income is divided among the population. There are two types of equity: horizontal equity, where those with equal ability to earn should pay equal tax rates, and vertical equity, where those who earn more should pay higher tax rates. The document states that equity and efficiency can be achieved together with government intervention, but there is typically a tradeoff between the two without intervention. Market efficiency is attained when resources are allocated to maximize total surplus, which is the sum of consumer and producer surplus. Sources of market inefficiency include price controls, taxes/subsidies, monopoly power, and externalities.