Chapter 18

Chapter 18 goes over the factors of production. The factors of production are three things, labor, land and capitol. Labor is the people who do the work, land is the physical space the work is done, and capitol is the equipment and buildings that are used. The chapter then mostly goes in depth on labor and the demand and supply of labor. Labor follows the same principles as traditional demand and supply curves, the x axis being quantity of laborers and the y axis being the wage, or price, of laborers. The marginal product is the addition of output that is had when another worker is hired. The value of the marginal product of labor is the value of the output of the workers which is just the price times the marginal product. Lastly marginal profit is the additional profit that is had when a new worker is hired. Labor experiences a diminishing marginal product which is when with each addition of a worker the increase in output. The labor curves on the graph can shift due to outside forces which will change the equilibrium wages and quantities for labors. For example a technological advance will shift the labor demand curve to the right and immigration would shift the labor supply curve to the right. I give this chapter a 1 out of 3. This topic is very similar to the original supply and demand curves so it was easy to understand the labor curves.

Chapter 17

Chapter 17 goes over oligopolies. An oligopoly is when there are only a few sellers for an entire market. Because of this oligopolies can have a huge affect on other seller's profits in the market depending on how much they produce. The simplest form of an oligopoly is a duopoly. In an  which contains two firms. Oligopolies can reach maximum profit if they cooperate with the other firms. This is called collusion and firms that do this are part of a cartel. However there are laws in place to stop most colluding. Since many firms cannot cooperate they compete to best each other, but this end up bringing the firms to a Nash Equilibrium where the firms will not increase production anymore because they will lose profits. If the firms cooperated they would've been able to gain much more profit. With this competition of firms game theory is introduced and the example of the prisoner dilemma is discussed.

Chapter 16

In chapter 14 we went over perfectly competitive markets. In Chapter 15 we went over monopolies. This chapter mixes the two together and goes over monopolistic competition. Monopolistic competition is when may firms sell a product that is not identical, but similar. This means that they still have market power and their demand curve is downward sloping. However since they are in a competitive market the firms are still affected by other firms exiting and leaving. The price is still set above marginal cost so the firms still earn a profit and produce a deadweight loss. Also since the firms can earn a profit they spend money on advertising to attract new consumers.

Chapter 15

Last chapter we talked about how firm behave in a competitive market. In a competitive market none of the firms had market power and they were all price takers meaning they had to take the price that the market had set. This chapter talks about monopoly or firms that have market power meaning they are mostly or completely the market. They are the only or one of the only firms selling a certain good or service. Since they have such market power they can set the price. To maximize profits monopolies will set their price somewhere above the average total cost line. A monopoly can happen in there different situations; a firm can have access to all of a certain resource allowing them to sell they're good or service, a firm can have a natural monopoly in which it is most cost effective if only one firm sells a good or service, and lastly if a company is given a patent by the government making that firm the only one to sell a certain good or service. A firm maximizes profit by finding the quantity supplied which is where marginal cost and revenue meet. Then finding where that quantity is on the market demand curve is where the price is found that maximizes profit.

Chapter 14

Chapter 14 goes over Firms in Competitive Markets. First it recaps competitive markets which are basically markets where firms have a negligible impact on the market. If a market is not competitive it is because a firm has market power. It then delves into the revenue of a competitive firm. The chapter introduces to us profit maximization and with that a new line on the graph. A marginal revenue line which stays constant. As long as the firms marginal cost is underneath the marginal revenue it is good  and operating at a benefit and if the marginal cost is above the marginal revenue it is operating at a loss. The maximization of the profits is when the marginal cost and marginal revenue are equal.

Chapter 13

I rate chapter 13 a 2 out of 3 because there were all the different graphs and how they worked together which made the chapter quite confusing. Chapter 13 was about the different costs of production. There were 4 total cost curves and all of them had their own features and shapes. There is the average total cost curve that takes into account both variable costs and fixed costs. Fixed costs are things that don't change because of quantity and the variable costs change as quantity changes. and then the only linear line was Marginal Cost. That graph gave me a little trouble. I understand the equation to determine it but I don't understand why its the only graph with a linear shape. I also marginal product was hard to understand for me. Other than that I understood everything, it was a detailed breakdown of the supply curve.

Chapter 11

This chapter talked about the types of goods there are 4 types of goods; private goods, natural monopolies, common resources, and public goods. These goods are combinations of excludability and rivalry in consumption. The chapter then proceeds to go more in depth with public goods and common resources. Public goods are not excludable and not rivals in consumption. Some examples are national defense and basic research. A drawback with public goods is there are free riders who mooch on the goods without paying back. Common resources are not excludable and they are rivals in consumption such as clean air and water and congested roads.. A drawback with common resources is the tragedy of commons which is since everyone uses the good it is used up for everybody. I give this chapter a 1.5 out of 3. The types of goods and they're specifications were easy to understand they may just be hard to remember.

Chapter 10

Chapter 10 talked all about externalities. In a two party market the invisible hand moves the price to an efficient price. However a third party can be involved when there are external effects of the market. In that case the invisible hand can no longer move the price to make the market efficient because it is not taking into account the well being of a third party. To solve the problems of externalities parties can meet an agreement to fix the situation. However if they cant the government must step in to solve the problem through corrective taxes or tradable permits. I would give this chapter a 2/3 for difficulty. We talked about externalities previously and I understood the basic concept, but once they added the new line of the demand and supply graphs I became confused.

Chapter 8

Chapter 8 goes over the affects of taxes on welfare, the market, and deadweight loss. Welfare depends on how to consumers, producers, and the government are better off. Without taxes the consumers and producers are better off, but with tax the consumers and producers are worse off, but the government is better off. If the losses of the buyers and sellers outweighs the revenue raised by the government there is a deadweight loss. When a tax is imposed the market becomes smaller because the quantity sold and demanded decreases. Therefore more people leave the market. Taxes cause deadweight loss because they prevent buyers and sellers from realizing the gains of trade. The quantity of deadweight loss depends on the elasticities of supply and demand. I'd give this chapter a 1 in difficulty. The graphs made the whole concept of deadweight loss very easy to understand and I do not have any questions yet.

Chapter 7

Chapter 7 goes over consumer surpluses and producer surpluses and evaluating the market equilibrium. A consumer surplus is how much consumers are willing to pay minuses what they did pay. Consumers are satisfied with the surplus because they didn't have to pay as much as they thought they would have to. A market with a high consumer surplus reflects economic well being. A producer surplus is the willingness to sell minus the cost to do something. Sellers are satisfied with a producer surplus because they are left a profit. A market with a high producer surplus reflects economic well being. An allocation of resources that boosts both surpluses is said to be efficient. AT the equilibrium price of supply and demand both surpluses are maximized. I'd give this chapter 1.5/3. It was not to hard to understand except I have one question. Wouldn't sellers want a small consumer surplus because that would mean they would get more money that the consumers are willing to pay?

Chapter 6

Chapter 6 starts off with how government policies on price can affect on market outcomes. Government policies can establish price ceilings and price floors, price maximums and price minimums respectively. If the equilibrium prices do not cross the boundaries everything is fine but once they do shortages and surpluses can occur. Surpluses happen with price ceilings and shortages happen with price floors. Next the book tackles taxes. When a good or service is taxed  the tax does not fall on the buyers or the seller, it falls on both. This is called the burden of tax and the way it is  spread is called the tax incidence. The way the tax is divided depends on how the supply and demand graphs look and their elasticity. I would give this chapter a 1 out of 3. I feel price floors and ceilings are easy to understand and so are taxes and their divisions among the buyers and sellers. However I do no exactly know how to calculate the actual division of the tax.

Crisis Actors and a Reighstag Fire

Everyday we encounter thousands of messages from  other humans and we have the self awareness to resist if we want, however we will go along with the message if we along with other people see it at the smart move. There are also people with no self awareness  who will take the message as fact immediately and can get played by the person sending out the message. It is important not to be this type of person. I definitely agree with the view presented that you must think for yourself. If you just believe everything  that is said to you and take it to heart it is easy for people to take advantage of you. By taking advantage of you they can destroy your livelihood. Nowadays it is very easy to be exposed to these malicious messages with the expansion of social media and the internet and it is important to be at least a little skeptical so you don't get played. For example now there are tons of sketchy websites on the internet that will try to steal your credit card information. Some people won't even think twice and just type away their credential. Next thing they now there missing all their money. Most people would look at the website and ask themselves is putting my info in their really necessary. However its not just these small time internet scammers we have to watch out for. We also have to take with a grain of salt what the big companies and big people have to say because they might not have the best intents for us people.

Chapter 5

I would say Chapter 5 had a difficulty rating of 2.5 for me. Chapter 5 was all about elasticity of supply and demand. Elasticity is how supply or demand respond to a change in price. If there is a large response to price it is elastic. If there is a small response to price it is inelastic. I will definitely have to reread the chapter the grasp of a further understanding. I understood the basic definition of elasticity, however I feel elasticity was easier to understand when it was on a graph. As soon as they take away the graphs and start talking about elasticity I become a bit lost. I understood the equations and how they related to the graphs, but again once the graphs were gone it became confusing. Also I had some trouble understanding how elastic changes on a demand or supply curve and how it doesn't stay constant.

Chapter 4 blog

Chapter 4 is mostly about supply and demand and how the two are connected. Early in the chapter Mankiw brings up the correlation between prices and demand. As prices go up people want to buy less since the goods are more expensive and as the prices go down people want to buy more since the goods are less expensive. This is called the Law of demand. This law of demand can be graphed to create a demand curve which is sloped downwards. The demand curve can shift depending on many variables such as prices of related goods and peoples tastes. After bringing up the correlation between prices and demand Mankiw brings up the correlation between prices and supply. The law of supply is that the higher the prices are the more profitable something is so the supply is higher. The lower the prices are the less profitable something is so supply is lower. This's can also be graphed into a supply curve which slopes upward. The supply curve can shift from variables such as innovations in technology and future expectations of prices. The demand curve and supply curve can both be put on a graph and where they meet is the market equilibrium. At this point the quantity of the good that buyers are willing and able to buy exactly balances the quantity that sellers are willing and able to sell. I would give this chapter a 2/3. The beginning is easy to understand, but as we move on to equilibrium and movements of the equilibrium it gets confusing. I also have a question on the law of supply. If something is less profitable wouldn't the firm want to increase the supply so more can be sold and make something profitable again?