As Scene 7 opens, Mrs. Shin and Shen Te are taking the washing off the clothesline. Mrs. Shin discovers a pair of Shui Ta's pants and is suspicious, but the secret is not yet revealed. Mr. Shu Fu enters and hands Shen Te a blank check, explaining that he wants to support her so she can continue being good. Mrs. Shin advises her to cash the check immediately, scolding Shen Te for still having feelings for Yang Sun after how he humiliated her.
Shen Te stumbles as she carries some of the washing, and Mrs. Shin becomes suspicious that she is pregnant. After Mrs. Shin exits, Shen Te feels her belly and realizes that she is, in fact, pregnant. She imagines a little boy to be present and introduces him to the audience as "my son, the well-known flyer!" She sings to him but is interrupted by Wong, who is leading a real child by the hand.
Wong introduces the child as one of the carpenters' children. They are starving because their father has lost his shop and has turned to alcohol. Shen Te says that the carpenter and his children can live in Mr. Shu Fu's cabins, to which he has allowed her total access. She also reveals to Wong that she is pregnant, but asks him not to tell Yang Sun since "we'd only be in his way." She asks about Wong's injured right hand and though he doesn't complain about it, she tells him to take a cart from her and sell everything that's on it, then use the money to see a doctor. Wong says that he is first going to find the carpenter and tell him that he and his children can live in Shu Fu's cabins.
The wife and husband who had previously taken advantage of Shen Te enter dragging tobacco sacks. After confirming that Shui Ta is not arround, they ask her to keep the sacks of tobacco in her home. Clearly, the sacks are stolen; they tell Shen Te to say they are hers if the police ask about them. When she refuses, the wife mocks her: "Listen to her! The good woman of Setzuan!" Shen Te then agrees to put them in the back room.
Shen Te sees the carpenter's child digging in the garbage and something in her changes. She decides that in order to provide a life for her son, she will be "a tigress to all others if I have to." With that, she takes Mr. Shui Ta's pants from the clothesline and leaves. Mrs. Shin sees this happen and is more suspicious. She directs the sister-in-law, the grandfather, and the unemployed man to Mr. Shu Fu's cabins as well. The sister-in-law complains about the quality of the cabins, even though she gets free lodging and should be grateful. The carpenter and the rest of his children return with Wong, also planning to move into the cabins.
Suddenly, Shen Te reappears, dressed as Shui Ta. Shui Ta says that the people may only stay in Shu Fu's cabins if they work for Shen Te. Mrs. Mi Tzu enters and Shui Ta tells her that he has decided not to sell the shop after all. He fills out the blank check Shu Fu gave Shen Te and shows it to Mrs. Mi Tzu; finally, she will get the six month's rent she keeps demanding.
The carpenter and the unemployed man, who have gone and retrieved the tobacco sacks the husband and wife put in the back room of the shop, return with them. The sister-in-law identifies them as her family's tobacco sacks. Knowing the tobacco is stolen, Shui Ta says, "Really? I thought it came from my back room. Shall we consult the police on the point?" As Shui Ta leads the group of new workers back to Shu Fu's cabins, Mrs. Shin realizes that Shen Te and Shui Ta must be the same person.
Scene 7a takes place in Wong's sewer. He tells the gods that he has had a nightmare about Shen Te and asks them to help her. He asks them to relax the rules and provide her with "good-will" instead of love. However, they refuse, shaking their heads and concluding that "the rules will have to stand," since helping Shen Te would only create more problems and would be too much work for them.
Time has passed before the beginning of Scene 8; Mrs. Yang reveals this to the audience, explaining that Shui Ta has given her son new motivation. She remembers their interaction from three months before, and it comprises Scene 8. She and Yang Sun reveal to Shui Ta that Yang Sun has spent all the money Shen Te gave to him and that he still doesn't have a job as a flyer. Shui Ta offers Yang Sun a job.
Not long after, Yang Sun discovers that the foreman, who is the former unemployed man, has been overpaying people. He is about to be overpaid, but is honest enough to reveal the miscalculation to Shui Ta. As a reward, Shui Ta promoted him to the position of foreman. He excels in that position of power, encouraging the workers to sing to work faster. Shui Ta witnesses this and concludes that he has brought out the best in Yang Sun.
The quality of "goodness" is challenged in Scene 7. Shu Fu seems like Shen Te's guardian angel in many ways; he hands her a blank check even though she won't marry him, simply because he wants her to be able to continue being "the good woman of Setzuan," as he says. But the audience witnessed Shu Fu injuring Wong's hand with a hot curling iron earlier in the play. When Shen Te offers to help Wong go to the doctor about his injured hand, he says to the audience, "She's still good."
When Shen Te realizes she is pregnant, her perception of goodness changes as well. She sees the carpenter's child digging in the trash and realizes her son will be born into this world. She sings and it is unclear whether the song is heard by anyone else. She sings that, "To be good to you, my son / I shall be a tigress to all others / If I have to. / And I shall have to." With this resolve, she will stand up for her own property as Mr. Shui Ta.
Wong is aware that love is a weakness and he reveals this to the gods in Scene 7a. They ask him how he wants them to help Shen Te and he suggests, "Well, um, good-will, for instance, might do instead of love?" This is because Shen Te's love for Yang Sun has created so many problems for her. This belief is reaffirmed by Shui Ta as he offers Yang Sun a job "in consideration of my cousin's incomprehensible weakness" for him. It is ironic that Shui Ta is able to recognize this weakness, yet as Shen Te he still acts on it.
In Scenes 7 and 8, Shui Ta creates a new kind of "goodness" for Shen Te to live by, employing those people who had come to expect free handouts from his "cousin." Being forced to work to earn his keep in Shu Fu's cabin seems to transform Yang Sun from "a dissipated good-for-nothing into a model citizen," as his mother puts it. This demonstrates the theme of historical materialism, since morality is being questioned alongside economics.
In Scene 8, music is used as encouragement to work. After he is promoted to foreman, Yang Sun directs the workers to sing to make them work faster. They sing The Song of the Eighth Elephant, which is about how the world values power over hard work. The eighth elephant is lazy but is rewarded even though his seven brothers do all the work; he is the one with tusks, so they are at a disadvantage. The song concludes, "Seven are no match for one, if the one has a gun!"