Chapter 17

Chapter 17's main focus was on monopolistc competitive markets, and how they differed from monopolies and perfectly competitive markets, along with how they were similar to said markets. The big difference between the perfectly competitive market and monopolistic competitive market would be how the graphs are, due to the fact that there is markup in one while the other is a price taker. The markup and downward sloping demand curve cause an inefficient amount of the product being made due to the firms creating deadweight loss of transactions not occuring. This can be offset by the government subsidizing the firms so that they produce at a loss but produce at the socially efficient scale; the problem with this is that there would be many firms that would need to be subsidized, along with the fact that the taxes created to subsidize would create more deadweight loss, and would lead to a very ineffective solution overall to the problem. Being able to be a price maker, these firms can enter the market when favorable conditions are met for what they want to produce more easily based on circumstances, but the effects of brands and advertising can effect whether entry is easy or not. Unlike perfectly competitive markets, these firms can advertise for more people to use their product, as they would want as many people to buy it instead of the "set" amount that would buy it. Debate over advertisements has been constant, due to it being such a powerful tool in the market and how they can affect consumer purchase without necessarily showing information about the actual product.

Chapter 16

Chapter 16 main focus was on oligopoly, a different type of firm that's not exactly in a perfectly competitive market or monopoly market, but instead something in between the two in an imperfect competition. A different approach has to be taken when dealing with these types of firms as they follow a different market structure than the norm, and whether the amount of firms is actually only a few or many. With only two firms, the oligopoly can be called a duopoly. These two firms can choose whether to cooperate or not, but if they do agree, there might be betrayal from one firm or both about producing more than they were supposed to to increase profit, as the firms have their own self interest that can affect how they act. Due to the self interest, it's hard for firms to actually reach the equilibrium price and instead reach the nash equilibrium, one that gives less profit overall to firms involved. This, along with anti trust acts, causes cartels to be very uncommon overall because of the disagreements caused by human nature.

Chapter 15

Chapter 15's main focus was on monopolies and how they affect the market/how their market affects society as a whole due to having strong market power in the business they are in. It discusses the different types of monopolies and how they each act in their own environments. They could be a monopoly due to the resources they have that allows them to have a lower input cost overall than other firms, are made based on the government's thinking of what is best for the public, and can be natural monopolies based on being able to produce at lower cost than other firms. They follow a downward sloping demand curve to make sure they have business, as while they may charge high prices for it, high enough prices would cause consumers to not buy the product/service. In this way, a monopoly is able to increase it's profit by a huge amount compared to a normal firm in a competitive market, as they are price makers, with the others being price takers. How they affect society depends on both the consumers' willingness to pay and whether what they're charging is reasonable. Along with this, price discrimination can also occur with monopolies, as they're able to lower prices below (or above) marginal cost to maximize profit due to the variety of consumers. In a competitive market, they wouldn't be able to do this as buyers would go elsewhere for their goods if price is higher than other firms, or the firm would be selling at a loss at a lower price.

Chapter 14

Chapter 14's focus was to expand more on how firms are affected in competitive markets, taking a more in-depth look at revenue and maximizing profit. Firms, depending on costs and profit, will decide to shut down production for however long is needed, or shut down permanently to not deal with the overpowering costs and no profit. However they go about it, the decision must be made based on short and long run effects. One of the main reasons to shut down would be because the average cost to make the good is more than the actual price of the good, in which selling at a loss would cost the firm much more than just paying fixed costs for the firm while it's shut down. This lets the firm decide whether to shut down permanently, or wait it out and see if the price of good rises (or it costs less to make it overall). Sunk costs are introduced, in which many ignore due to the fact that they're unavoidable when dealing with certain parts of production for a firm. The decision to enter or exit a market in the long run for the firm depends on, mainly, profit, total cost, total revenue, and quantity of the good. Because of how important they are, firms have to take all variables into account when dealing with this type of situation. For some, the short run might be awful but might pay off overall in the long run, with this risk involved on whether they should stay in the market or exit completely.

Chapter 13

Chapter 13's main focus was mainly on production and costs, with there being explicit and implicit costs with different variations of each type of cost. Total cost and the firm's cost are technically different, in that total takes into account the value of inputs used, while firm's cost takes into account all opportunity costs. There's also different types of profits, with there being economic and accounting profit that takes into account cost and explicit cost respectively. One of the main differences is that economic profit can be zero and the company will be doing well, as opportunity costs are taken into account, unlike accounting profit which is the one mostly everyone knows about. The product function and total cost curves show the relationships that are shared between quantity and revenue/cost, with the two graphs being inverses of each other in terms of how they look. The main idea shown is that, constantly increasing the quantity will have varying effects based on where in the graph the increase is at, as in the beginning increasing the quantity of a good will be very beneficial to a firm due to the revenue it would bring in and the low cost of it. But as the product function gets flatter over time, it becomes worse for the firm to constantly add the quantity of what they're adding as profit will decrease and total costs will keep increasing because of it.