The price paid for the use of land and other natural resources that are completely fixed in total supply
New cards
2
Incentive function
A high price provides an incentive to offer more of the resource, whereas a low price prompts resource suppliers to offer less
New cards
3
Single-tax movement
Henry George; economic rent could be heavily taxed, or even taxed away, without diminishing the available supply of land or, therefore, the productive potential of the economy as a whole
New cards
4
Loanable funds theory of interest
Explains the interest rate not in terms of the total supply of and demand for money but, rather, in terms of the supply of and demand for funds available for lending (and borrowing)
New cards
5
Time-value of money
A specific amount of money is more valuable to a person the sooner it is obtained
New cards
6
Future value
Amount to which some current amount of money will grow to as interest compounds over time; forward-looking
New cards
7
Present value
Today’s value of amount of money to be received in the future
New cards
8
Pure rate of interest
Best approximated by the interest paid on long-term, virtually riskless securities such as long-term bonds of the U.S. government (20-year Treasury bonds)
New cards
9
Nominal interest rate
The rate of interest expressed in dollars of current value
New cards
10
Real interest rate
Rate of interest expressed in purchasing power—dollars of inflation-adjusted value
New cards
11
Innovations
________ undertaken by entrepreneurs entail uncertainty and the possibility of losses, not just the potential for increased profit.
New cards
12
Usury laws
Specify a maximum interest rate at which loans can be made
New cards
13
Economic profit
What remains after all costs—both explicit and implicit costs, the latter including a normal profit—have been subtracted from a firm’s total revenue
New cards
14
Explicit costs
Payments made by firm to outsiders
New cards
15
Implicit costs
The monetary income the firm sacrifices when it uses resources that it owns, rather than supplying those resources to the market
New cards
16
Normal profit
Minimum payment necessary to retain the current line of production
New cards
17
Static economy
One in which the basic forces such as resource supplies, technological knowledge, and consumer tastes are constant and unchanging
New cards
18
Insurable risks
Avoid losses by paying annual fee to insurance company
New cards
19
Uninsurable risks
Uncontrollable and unpredictable changes in the demand and supply conditions facing the firm (and hence its revenues and costs)
Studied by 2 people
Note 
Flashcard (33)