(See related pages)
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| economic profit | (pure profit) The total revenue of a firm less its economic costs (which includes both explicit costs and implicit costs); also called above normal profit. (See page(s) p. 323) |
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| economic rent | The price paid for the use of land and other natural resources, the supply of which is fixed (perfectly inelastic). (See page(s) p. 315) |
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| explicit costs | The monetary payments a firm must make to an outsider to obtain a resource. (See page(s) p. 323) |
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| implicit costs | The monetary income a firm sacrifices when it uses a resource it owns rather than supplying the resource in the market; equal to what the resource could have earned in the best-paying alternative employment (including a normal profit). (See page(s) p. 323) |
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| incentive function of price | The inducement that an increase in the price of a commodity gives to sellers to make more of it available (and conversely for a decrease in price), and the inducement that an increase in price offers to buyers to purchase smaller quantities (and conversely for a decrease in price). (See page(s) p. 316) |
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| insurable risks | An event that would result in a loss and whose occurrence is uncontrollable and unpredictable; insurance companies are not willing to sell insurance against such a loss. (See page(s) p. 324) |
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| loanable funds theory of interest | The concept that the supply of and demand for loanable funds determines the equilibrium rate of interest. (See page(s) p. 318) |
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| nominal interest rate | The interest rate expressed in terms of annual amounts currently charged for interest and not adjusted for inflation. (See page(s) p. 322) |
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| normal profit | The payment made by a firm to obtain and retain entrepreneurial ability. (See page(s) p. 324) |
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| pure rate of interest | An essentially risk-free, long-term interest rate not influenced by market imperfections. (See page(s) p. 321) |
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| real interest rate | The interest rate expressed in dollars of constant value (adjusted for inflation); equal to the nominal interest rate less the expected rate of inflation. (See page(s) p. 322) |
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| static economy | An economy in which factor supplies, technological knowledge, and consumer tastes are constant and unchanging. (See page(s) p. 324) |
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| uninsurable risks | An event that would result in a loss but whose frequency of occurrence can be estimated with considerable accuracy; insurance companies are willing to sell insurance against such losses. (See page(s) p. 324) |