Chp.13

Chapter 13 is about the production aspect and brings up the terms total revenue which is the amount a firm receives for the sale of its output. Also, total cost which is the market value of the inputs a firm uses in production, profit is total revenue minus total cost, production costs is input costs that require an outlay of money by the firm, implicit costs is input costs that do not require an outlay of money by the firm, economic profit is total revenue minus total cost, including both explicit and implicit costs. Accounting profit is total revenue minus total explicit cost and production function is the relationship between quantity of inputs used to make a good and the quantity of output of that good.

Chp. 11

Chapter 11 is mainly about the types of goods there are in a market. For example, a good can be public, private, common resource, or natural monopoly. If the good is public then it is not excludable, does not require payment, and is not rival in competition, one person's use of the good diminish the opportunity for others. Private goods are excludable and rival in competition, common resource goods are not excludable and rival in competition, and natural monopolies are excludable and not rival in competition. A public good is always associated with positive externalities that will be subsidized while common resources are associated with negative externalities and become regulated by the government. In the private market, people known as free riders, people who receive the full benefit of something while avoiding payment, cause externalities for companies and in response private companies produce less to give free riders less of an incentive to free ride.

Chp. 10:

Externality: the uncompensated impact of one person’s actions on the well-being of a bystander,If it’s adverse then the negative externality,If it’s beneficial the positive externality, and a Market is not efficient when there are externalities because buyers and sellers neglect the effects of their actions. For example, exhaust from cars is a negative eternality, restored historic buildings is a positive externality, dogs barking is a negative externality, and research into new technology is a positive externality. For externalities and market inefficiency, the Demand curve represents the value of the good to the consumers and how willing they are to buy that good while the Supply curve represents the cost of the good to the producers and how willing they are to produce that good at a given price. In addition, Negative externalities Cost to society is larger than the cost to producers, Social-cost: private costs of producers plus the costs of others indirectly affected, Difference between supply and social cost curve is a cost of the negative externality.

Chp. 8: Application: The Costs of Taxation

Chapter 8 is about the effects of taxation in the market. The chapter explains that when a ax is levied on buyers, it causes the demand curve to shift downwards by the size of the tax while if the tax was levied on the sellers, the supply curve shifts upwards by the size of the tax. The end result is that the price paid by buyers increases and the price received by sellers are decreased. In addition, a tax on a good causes the size of the market for the good to decrease. Consumers, producers, and the government receive some type of benefit from taxation; consumers receive consumer surplus, producers receive producer surplus, and the government receives total tax revenue. Welfare without tax would leave the equilibrium at the intersection between the supply and demand curve.

Chp. 7: Consumer, Producer, and Efficiency of Market

Chapter seven is about a buyer's willingness to pay for a good. This means the maximum amount the buyer will pay for the good. It brings up the term welfare economics which is how the allocation of resources affect economic well-being. The chapter also discussed consumer which is the amount of money they are willing to pay minus the amount of money they actually paid. The consumer surplus shows the benefits that a consumer receives after participating in a market. When measuring the consumer surplus it is good to know that it is similar to the demand curve and the vertical drops in the line represent a buyer’s willingness to pay. The area below the demand curve and above the price is the consumer surplus. Since  in a consumer’s surplus, the highest willingness to pay has the largest amount of surplus, however, the producer’s surplus is greater when the producers have the lower cost.