Chapter 18

Chapter 18 covers the Factors of Production.
The factors of production include
 land: all natural resources necessary to create a good
 labor: the effort people put into making the good
 capital: assets invested in the firm by the firm for future production
One of the ideas you get out of this chapter is that in order to maximize profit
Firms hire workers up to the point where the value of the marginal product of labor equals the wage
 If they don't then they are losing money and must lay off some workers to be profitable
A firm's decision to hire is based on the value of the marginal product
Profit maximizing firms will hire at a point where value of marginal product is equal to wages
Changes in one market of a factor of production affects the other factors involved in the firm

Ch. 17

An oligopoly is a market with:
Few sellers
Similar products
Example of an imperfect competition
Simplest version is a duopoly with 2 firms and decide the quantity to sell.
They collude to form a cartel and act as a monopoly.
They don't collide for self interest:
Difficult to agree, self interest
Higher quantity, lower price and profit
Nash Equilibrium
Cheating=Pursuing own self interests.
Oligopolists form cartels and they collide over the production and price of goods.
Collusion is an agreement among firms in a market.
Firms act with self interest at a price that maximizes profit.
They use strategies like Nash Equilibrium.
Firms produce more than monopoly and less than competitive.
As number of sellers grow, the more the graph begins to look competitive.
The prisoners' dilemma shows why it is difficult for oligopolies to work.

Chapter 16

Monopolistically competitive markets are a combination of perfectly competitive and a monopoly.
Thus the firm's are:
Price takers due to competition.
Price makers because they sell slightly different products.
Monopolistically competitive markets are characterized by:
Lots of firms
Differentiated Products:
Advertisements
Brand Names
Free Entry
They produce on the downward sloping portion of ATC at a price above marginal cost.
They cause deadweight loss because price is above market cost.
Their goals are to promote brand loyalty that can be irrational at times.
These markets aren't easily government fixed like the other monopolies.

Chapter 15

This chapter is about monopolies.
It discusses how they are formed.
It discusses how they make profit.
It discusses their welfare cost.
A monopoly is a firm that is a sole seller of a product without close substitutes.
The firms become price makers.
The marginal revenue of monopoly firms arent a straight line because they hold market power.
Monopolies still produce where marginal revenue is equal to marginal cost.
Monopolies can be inefficient but are able to be regulated.

Chapter 13

This chapter is about the production of goods and the cost of that production.
Costs and production may vary as they increase.
The amount of goods made may increase at a smaller amount every time another employee is added.
All kinds of costs of production must be taken into account by suppliers to maximize profits.
Industrial organization is the study of how firms' decsions about prices and quantities depend on the market conditions they face.
A firm's average total cost is total cost divided by the quantity of the output, and its marginal cost is the amount by which total cost rises if output increased by 1 unit.

Chapter 11

Chapter 11 is about different goods in the market and how they can be separated.
They can be excludable or rival in consumption.
An excludable good, is a good that can cause people to be prevented from using the good, usually involving price.
A rival in consumption means that one person's use of a good reduces another person's ability to use the same good.
These are are exemplified using the Punnet Square.
The different types of goods are public, private, common resource, and natural monopoly.
A public good is a good that is neither rival in consumption nor excludable.
A private good is excludable and rival in consumption.
A common resource is rival in consumption, but isn't excludable.
A natural monopoly is excludable, but isn't rival in consumption.
Public goods are government made and have positive externalities.
Private goods are government made and have negative externalities.

Chapter 10

This chapters talks about the affects of externalities.
Externalities occur when important economic interactions take place outside of the market so the true cost of the good isn't shown.
Negative externalities cause the social cost of a good to be above the supply curve.
Positive externalities put the social cost of a good above the demand curve.
Both of them create market inefficiency.
The two ways to solve externalities is through private policy or government regulation.
The government's way to solve these inefficiencies is through taxes and subsidies.
Negative externalities should be taxed.
Positive externalities should be subsidized.

Chapter 8

Taxes get the government revenue therefore it is necessary.
However, taxes make the market smaller.
The larger a tax, the less revenue received as the market becomes smaller.
The Laffer Curve shows that at first revenue increases, but as it continues to increase the revenue slowly becomes less and less.
Deadweight loss of taxation is the lost gains from trade because of tax making a smaller market.
More elastic curves result in a large deadweight loss.
Inelastic curves result in the opposite.
The reduction in consumer and producer surplus is often larger than tax revenue.

Chapter 7 Blog

Key vocab that is mentioned is the willingness to pay and consumer surplus.
Consumer surplus is max amount a buyer is willing to pay for a good minus amount buyer actually pays.
Demand curves of buyers aren't drawn with steps because the changes in buyers dropping out from the new price is very small and becomes essential to create a smoother curve.
Consumers want to pay the least and producers want to receive the most possible.
Different people have different values for the same good.
Efficient markets maximize consumer surplus and producer surplus occurring at equilibrium.
Economic welfare has to do with the amount buyers save, producers make, and how even they are.

Chapter 6 blog

The chapter describes how the government can intervene in the market. However, it says multiple times the government shouldn't.
There are price floors to place minimum prices on goods.
There are also price ceilings to place maximums on goods.
These can lead to both surpluses and shortages.
Taxes puts a wedge in between what buyers pay and what sellers receive.
Taxes split the burden between the buyers and sellers, however the inelastic part of the trade takes the most burden.

Article due 9/26

It is odd how the view of crisis attacks are kind of like saying it is just governments trying to assert power or instill fear on its citizens. Crisis attacks are found in social narrative, not small things. They are often very big and have an affect on many people. This often becomes things that are so called common knowledge when it reality some of the these things didn't truly happen. Most people are trying to go along with the status quo but that is essentially following a facade version of yourself. The "emergency policies" are more or less just secret ways to grow their wealth. Lies the people in power tell are things they try to say they are trying to protect you for your own good. It is the underlying principle of why every speech apparently has some sense no matter how false or ideotic the idea sounds.

Chapter 5

Elasticity makes sense because that represents the fluidity of the market.
The price elasticity of demand is a little confusing but I understand what makes goods inelastic or elastic.
What does it mean for a good to have close substitutes?
It makes perfect sense that a good like water's demand wouldn't change if the price went up making water inelastic.
Why is it more likely for goods to be more elastic over time?
The midpoint method is slightly confusing.
The number 1 is key in determining elasticity.
More than is elastic.
Less than is inelastic.
Equal meams quantity moves at same amount proportionately as price.
Perfectly inelastic is vertical
Perfectly elastic is horizontal
Demand curve is essentially the slope of the graph.
Total revenue is equal to: (price of good)x(quantity sold)
Inelastic: increase in price leads to increase in revenue
Elastic: increase in price leads to decrease in revenue
Three Rules to Remember:
-Inelastic demand: price and revenue move same direction
-Elastic demand: price and revenue move in opposite directions
-Unit Elastic demand: revenue remains constant when price changes
Normal goods have positive income elasticity.
Necessities have smaller income elasticity.
Luxuries have higher income elasticity.

Chapter 4 Blog

I understand that a market is filled with buyers and sellers.
I believe that competitive markets are everywhere and there will always be a competitive market.
I don't understand how a Perfectly Competitive market is possible.
Would Monopoly be similar to an absolute advantage?
I'm not understanding fully the demand graph.
Would a consumer be considered a third party effect?
Would substitutes and compliments be related?
Can you explain the Supply Curve?
I understand pretty much all the rest, especially the Law of Supply and Demand.