Summary in haiku form
Don’t want one more or one less.
Think at the margin.
Summary in one paragraph
Supply curves tell us how much sellers want to sell at certain market prices, but they can be reinterpreted as marginal cost curves, which tell us the additional cost of producing one more unit of output. And demand curves, which tell us how much buyers want to buy at certain market prices, can be reinterpreted as marginal benefit curves that tell us the additional willingness-to-pay for consuming one more unit of output. Every story about supply and demand therefore has a parallel story about marginal costs and benefits, e.g., a tax on sellers that reduces supply—thereby shifting the supply curve to the left—can also be seen as a tax that increases the sellers’ marginal costs of production, thereby shifting the marginal cost curve up.
Notes on specific pages
Page 156: “Just as we can learn about pool sharks by studying physics…”
The analogy of the pool player comes from Milton Friedman, who won the 1976 Nobel Prize “for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy.”
Page 162: John Hicks and the relationship between demand curves and marginal benefit curves.
John Hicks shared the 1972 Nobel Prize (with Kenneth Arrow) “for their pioneering contributions to general economic equilibrium theory and welfare theory.”
