Glossary
Accounting cost—see explicit cost. Accounting profit—the difference between total revenue and total explicit cost. Adjusted coefficient of determination—the coefficient of determination always increases as additional explanatory variables, whether they are statistically significant or not. The adjusted coefficient of determination increases only when statistically significant explanatory variables are added to the regression equation. Adverse selection—an ex ante asymmetric information problem in which the market becomes crowded with individuals or products having undesirable characteristics. Advertising elasticity of demand—the percentage change in unit sales given a percent change in advertising expenditures. Agency costs—the loss of shareholder value resulting from the principalagent problem. Allocating function of prices—the process whereby productive resources are reallocated from low-value to high-value use in response to changes in the prices of final goods and services. Arc price elasticity of demand—the price elasticity of demand calculated using the mid-point formula. Asymmetric impatience—when players in a dynamic bargaining game use the different discount rates to evaluate the present value of their share of the bargaining surplus. Asymmetric information—when one party to a transaction has more, or better, information than the other party to the same transaction. Auction—a public forum in which buyers and sellers compete for the right to purchase or sell something of value. 405
