Chapter 13: The Costs of Production

Chapter 13, The Costs of Production, talked about how to determine the total costs and revenue the supply firms produce over a short and long run. To start off, one of the laws of economics is mentioned and is crucial to remember-the law of supply. According to the law of supply, suppliers are more willing to produce more goods at a higher price. Therefore, the firms will tend to produce more if they have the  money, which results from their profits. To determine, the profits a firm can receive is through the total revenue minus the production costs. The production costs include the amount of money it takes to buy the goods as well as how much opportunity cost is needed and left behind.

Article Review #4: Global Deflation Alert: Hidden EM Debts To China Could Be Immense

Surprisingly, this week's article was relatively short compared to previous times. This article, written by Carmen Reinhart, is discussing the hidden debts from the merging countries and how they can have a vulnerable effect at a global level. For starters, the article mentions how the conversation headlines at the International Monetary Fund’s annual meetings have changed from the recovery from the 2008 financial crisis to the potential financial crisis within the emerging nations, such as China. China was mentioned in this article to serve as an example of how a potential economic crisis can lead to negative effects towards others, such as the US, Brazil, or Argentina. They can create international damage since the major funding of their projects were made through the US dollar currency, thus lowering the dollar value if a crisis happened. By lowering the value of the dollar, that would decrease the revenue collected by the US government and would reduce our economic growth and power. Another important element about the article was the uncertainty of how to find the hidden debts within the records. The main problem that arises when discussing hidden debts, is the unavailability to quickly access exact figures of money trading since the records at major-level international organizations keep no track on this business.

Overall, the article was fairly easy to read and understand since it was short and it didn't contain many high-economic vocabulary words. 

Chapter 11: Public Goods and Common Resources

Chapter 11 is all about public goods and common resources within the economy. Despite the chapter being based solely on two types of goods, the chapter begins with explaining the four different types and providing examples of each. The four types of market goods are private goods, natural monopolies, common resources, and public goods. Ultimately, the major component of determining what a good falls under is found through two questions: are there rivals in consumption and is it  excludable? Rivals in consumption means the when a good is used, the ability of another person for that same item diminishes. Excludable means that the property if a good whereby a person can be prevented from using it. A good example of a public good would be a firework display. Usually, it comes out that it is more beneficial for the government to serve and produce a public good since a market failure would occur at a private supplier and buyer transaction was made. A key element with these two goods is the term of a free rider. A free rider is a person who receives the benefit of a good but avoids paying for it. A good example of a common good is the idea of congested roads. A good way of explanation the book did for a common good was to connect it to the Tragedy of the Commons story.
Overall, I would give the chapter a rating of two since it was a fairly easy read with many god descriptions but it was still too long in my opinion.

Chapter 10: Externalities

Chapter 10 mostly focused solely on the idea of externalities and the effects they can cause in a competitive market. Externalities are the uncompensated impacts of a third-party of bystander when a trade happens in a specific good market. Externalities can also be either positive or negative; positive symbolizing a good outcome such as education. and a negative externality could be one such as pollution or a gas tax. When looking at the visual interpretation of externalities on a supply and demand graph, a positive externality causes a change above the demand curve and a externality causes a change to the supply curve to the left.
Since all externalities are considered market failures, the government usually tries to fix the failure, or mitigate it, by passing taxes or subsidies. By doing so, the government is internalizing the externalitiy. Internalizing the externality means making or forcing the company/supplier to see the problem and find a solution to better the situation. Forms by which the government can implement these courses of action would be by either command-and -control regulation or market-based policies. Market-based policies include corrective tax and trading permits. In addition to the government trying to fix the problem of externalities, private solutions can occur through charities, moral codes, and self-interest of the relevant parties. Another important theorem/idea to go along with this subject would be the Coase theorem, which means that private parties can bargain without a cost over the allocation of resources and they solve the problem themselves.
Overall I would give the chapter a rating of 2 since it was fairly easy to read and understand through the examples. Yet, the chapter was very long and confusing at certain parts.

Article Review #3

Once again, the article review is about David Stockman and his hatred towards the Feds. In this week's article, Stockman is now looking at the global economy and the impact the Feds are having on it. To start off, Stockman is basically telling us, the reader, that the whole world is screwed and their is a potential global recession coming our way. The reason why there is a potential recession about to happen is due to the huge financial bubbles in the labor market that were caused by the different countries and the Feds. Basically, the countries all supported each other to fund trades with money that was already being blowing up with debt costs, just like China's economy. All of these ideas of debt costs are connected to the idea that the credit boost in the twentieth century is barely going to create an impact in today's world. Stockman also goes into detail about how the European countries tend to not mix their money funds with helping their economies come out from debt. 

Overall, the article was okay to understand but it did include a lot of abbreviations and charts that were confusing and a hassle to look up. It was a hassle to look them up since there were so many of them in the piece. For example, Stockman kept on writing Bernanke; who is this person?

Chapter 8: Application: The Costs of Taxation

Chapter 8 is all about the cost of having the government place a tax on a good and the effect it can create. As learned in Chapter 7, the total surplus of a good is the combined total of the consumer and producer surplus. However, when a tax is levied on a good, the total surplus diminishes, producing a tax revenue and deadweight loss. Deadweight loss is the fall in total surplus from a market distortion, such as a tax. Deadweight loss and changes in welfare go hand-in-hand with one of the ten principles of economics; people respond to initiatives. When comparing this idea to the world today, it still holds true. It is clearly visible during presidential campaigns since the citizens are always concerned of having to pay tax (example: labor tax). With a tax being placed, less sellers are willing to produce and less buyers are willing to demand the good. Therefore, many economists continue the debate whether or not deadweight loss is beneficial to the society. It is also important to know that the more elastic the curve is (supply or demand), the greater the amount to deadweight loss. Another important thing to mention about deadweight loss is that it creates a laffer curve. A laffer curve shows how the tax revenue is impacted through time. Also, the bigger the tax, the more deadweight loss produced.
Overall I would give the Chapter a rating of two since it was an easy read and it is now connecting what we learned to a bigger idea and the government's role in the economy. However the introduction of a supply-slide economics got me confused and I would like to understand more about it.

Chapter 7: Consumers, Producers, and the Efficiency of Markets

Chapter 7 was one of the easier chapters to read and follow along. This chapter is divided into three main concepts all relevant to the needs and willingness of the buyer/seller. The concepts are buyer surplus, producer surplus, and market efficiency. Quickly seen, buyer and seller surplus are extremely alike and they have similar forms of finding the total surplus. Another thing the chapter talks about is how the free competitive market produces efficiency and not so much equity. In the book, the reason for not including equity right now is because the social planner is only focusing on the efficiency of the seller/buyer. Now that I mention the idea of the social planner, the term “invisible hand” is also brought back to explain how the market balances out. At the end of the chapter, the concluding paragraph introduces the terms of market failure from externalities and market power. In the end, I think that a quick summary or further explanation of the 3 insights of market outcomes would be beneficial to understand the overall concept. I would like a better explanation of this because I was confused a bit about the purpose behind it and what they were saying. In conclusion, I would give the chapter a rating of 2.5 since it was an easy read but there was still some questions behind the meanings.

Article Review #2: David Stockman's Contra Corner

Overall, I didn't mind reading this article. In comparison to the first article review, this article was much easier to read and follow along with the comparisons and effects in the economy. In its totality, the article is discussing the effects of the bull and how the overall economy is heading for destruction. The two specific economies mentioned in the review were the Chinese and Brazilian economies. The Chinese economy was desperate to increase trade for their reds, or their currency. With the eagerness and pressure of increasing trade, a new conflict arose for the Chinese. According to recent news in the economic world, a new and huge steel-making company is staring in the Chinese nation. This steel corporation would be the biggest (by a lot) in the west hemisphere. Looking at the Brazilian economy, the Brazilians have a different problem on their hands. During the previous seven years, the sales of Brazilians have decreased, causing a surplus and inefficiency to produce buyers for their trade. All of these small things start to add up in the end and that is why there are financial bubbles all over the place. At first, the bubbles started with the fall of the commodities market. According to the article, the bubbles are all over the place and ready to explode!! I must admit, the article is extremely pessimistic and it makes me scared to enter the world and have to pay the broken plates of society. First it was paying the effect of the baby boomers and now it's this big mess. I like the article but the only thing that I need further explanation are for the abbreviations and the titles of trends.