Chapter 13

Ah, Chapter 13, filled with information about production costs and boatloads of terminology. Mankiw warned us at the beginning of the chapter that the material would be boring, the topic being dry and technical, but I thought the ideas were actually pretty interesting, and it helps to break down the supply curve to get a more complete understanding of the reasons individual firms stay in or leave the marketplace. The first interesting bit I found with Chapter 13 came when Mankiw defined explicit and implicit costs being key to an economist's evaluation of the profitability of a business. Before, I hadn't really thought about the implications of opportunity costs on how a business makes their decisions, but now I see it as a very real factor. The difference between economists and accountants was a bit of a belabored point, but because it was drilled into my head, it helped me understand the concept of implicit costs better. One thing I didn't understand until we talked about it in class was why marginal product diminished from the get-go. The reason I didn't get it was because that wasn't correct. Marginal product initially increases, then levels out and THEN starts to diminish. That's what Mr. Waller talked about as the three stages of production, and it helped to clarify my understanding of the chapter. Overall, this chapter was one of the most difficult in terms of terminology so far, and I would give it a 3/3 in terms of difficulty.