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.