________ in a market is maximized when exchange occurs at the equilibrium price.
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Table Principle
The No- Cash- on- the- ________ describes powerful forces that help push markets toward equilibrium.
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additional opportunities
A market in equilibrium is one in which no ________ for gain remain available to individual buyers or sellers.
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Equilibrium
________ will not be socially optimal when the costs or benefits to individual participants in the market differ from those experienced by society as a whole.
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Economic rent
________: that part of the payment for a factor of production that exceeds the owner's reservation price, the price below which the owner would not supply the factor.
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Explicit costs
________: actual payments a firm makes to its factors of production and other suppliers.
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Invisible hand theory
________: Adam Smith's theory that the actions of independent, self- interested buyers and sellers will often result in the most efficient allocation of resources.
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Economic profit
________= Total revenue- Explicit costs- Implicit costs.
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Accounting profit = Total revenue
Explicit costs
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Explicit costs
actual payments a firm makes to its factors of production and other suppliers
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Accounting profit
difference between a firm's total revenue and its explicit costs
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Implicit costs
opportunity costs of the resources supplied by the firm's owners
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Economic profit = excess profit
difference between a firm's total revenue and the sum of its explicit and implicit costs
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Normal profit
opportunity cost of the resources supplied by a firm's owners, equal to accounting profit minus economic profit
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Rationing function of price
changes in prices distribute scarce goods to those consumers who value them most highly
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Allocative function of price
changes in prices direct resources away from overcrowded markets and toward markets that are underserved
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Invisible hand theory
Adam Smith's theory that the actions of independent, self-interested buyers and sellers will often result in the most efficient allocation of resources
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Barrier to entry
any force that prevents firms from entering a new market
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Economic rent
that part of the payment for a factor of production that exceeds the owner's reservation price, the price below which the owner would not supply the factor
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