Key Terms and Concepts

perfect competition,283–288,316, 319–331,352 theory of the firm,5,8–10,16,21–23,27, 33–34,36–37,113,198 unconstrained,279–295 Psychological pricing,470,474,476,478 PV (See Present value) Public goods,687,715–724 Purcell,E.J.,97 Pure capitalism,11–13,16,37

-QQayum,A.,194,550 Quadratic formula,77 Quadratic function,54–55,97 Quandt,R.E.,41,97,233,264,309,358,377, 417 Queuing,131–132,138,140

-RRaiffa,H.,406,417,619 Ramanathan,R.,9,41,111,144,222n Range,44 Rasmusen,E.,619 Ration coupons,131,138,140 Rationing function of prices,129–132,136, 138,140 Raviv,A.,22,41 Reaction function,393–404,413 Repeated game,554,568–586,588,609–611 Required rate of return,509,521,541–544 Retained earnings,540,544 Returns to scale constant,200,218–221,224,226–227,250, 252–253,259–260 decreasing,200,218–222,224,226–227, 250–253,259–260 increasing,200,218,221–222,224, 226–227,250–253,259–260 Revenue maximization: first-order and second-order conditions, 299–300,303–304 unconstrained,299–302 Riley,J.,685 Risk,621–680 Risk aversion,627–648,655,660–662, 666–667,669,671–672,674,678,680 Risk avoider,555–556,611 Risk-bearing theory of profit,32 Risk-free rate of return,30 Risk-indifferent rate of return,658 Risk lover (See Risk taker) Risk neutral,627,630,670,678,680 Risk premium,30,633–634,638–639,646, 678–679 Risk-return indifference map,636 Risk taker,555–556,611,627,630–631,655, 661–662,670,678,680 Robinson,J.,361,373,377,483 Robinson-Patman Act,691,693 Rosenfeldt,R.L.,511n Rosenlicht,M.,97 Rubinstein,A.,607,619 Rule of reason,382–383 Rules of exponents,52–53 Rules of differentiation: chain rule,67 exponential and logarithmic functions,68 implicit differentiation,71–72 inverse function rule,69–71 power-function rule,63–64 product rule,65 quotient rule,66–67 sums and differences rule,64–65

-SSalvage value,506,508,514,544 Salvatore,D.,483 Samuelson,P.A.,102n,144 Satisficing behavior,21,34,37 Savage,L.,685 Scarcity,1,3,27,37 Schall,L.D.,550 Schelling,T.,586,619 Schneidau,R.E.,483 Schotter,A.,406,417,619,685 Scitovsky,T.,483 Second-degree price discrimination,420, 424–434,474,476,478–479 Secure strategy (See Maximin strategy) Security deposit,132 Seller’s reservation price,602 Selten,R.,558,591,620 Sequential-move game (See Multistage game) Shanley,M.,619 Shavell,S.,22,41 Sherman Act,382–383,691–693 Short-run monopolistic equilibrium,334–335 Short-run monopolistically competitive equilibrium,363–364 Short-run perfectly competitive equilibrium, 317,323,325,329,331

Shortage,129–134,138,140 Shutdown price,326–328,331,351,353 Silberberg,E.,41,45,82n,83n,87n,97,102, 144,194,233,238n,239n,257n,264,298, 309,358,378,417,483,685,727 Simon,H.,21,41,685 Simultaneous move game,405–406,412–413 Slope of a linear function,47–48 Slumlords’ dilemma,648–650 Slutsky,E.,194 Slutsky equation,102n Smith,A.,14,21,41,197n Software game,592–601 Solution concept,595,597–598,600–601, 609 Stabilization policy,14 Stackelberg model,400–402,404,411,413 Stage I of production,211–212,225,228 Stage II of production,211–212,225,228 Stage III of production,211–212,225,228 Stages of production,209,211–212,225,228, 237,247–248,251,261 Standard deviation,625–627,634–639, 653–655,657–658,678,680–681 Standard Oil,382 State preferences,669–672,675 Static game (See Simultaneous move game) Steiner,P.O.,483 Stigler,G.J.,194,264,378,381,387,417 Stiglitz,J.E.,727 Strategic behavior,552–554,609,611 Strategic form of a game,595–596,611 Strategic behavior,379,404,407–408,411, 413 Strategy,404–405,407–413,555–568, 571–572,575–576,578,610–612 Strategy profile,404–405,407–408,413 Strictly dominant strategy,405,407–409,411, 413,557–562,568,576,586,611 Strictly dominant strategy equilibrium, 559–562,576,586,611 Subgame,591–592 Subgame perfect equilibrium,591–592,607, 609,611 Subroot,591–592 Substitutability of factors of production, 199–200,212–216,226 Substitute goods in consumption,107–109, 165–168,184,186–190 Substitute goods in production,116–118 Substitution effect,102 Sunk cost,239,261 Supply change in supply,114–118,124–128,134, 137–140 change in quantity supplied,114–115, 117–118,124,137,139–140 complements,116–118 law of supply,113–114,137,139 movement along the supply curve,114, 117,137,140 number of firms in the industry,117–118 prices of productive inputs,115–116,118 shifts of the supply curve,100,114–118, 124–129,132,135,138–140 substitutes,116–118 supply curve,100,113–114,116–118, 125–127,135,137–140 supply determinants,114–118 supply versus quantity supplied,113–118 taxes and subsidies,116,118 technology,116,118 Surplus,129–130,134–136,138,140 Sweezy model,386–390,404,408,411–412 Sweezy,P.,386,417

-TTarquin,A.J.,549 Taylor,L.D.,194 TC (See Total cost) Terminal value,498,535,543–544 Telser,L.G.,378 TFC (See Total fixed cost) Third-degree price discrimination,420, 434–443,469–470,475,477–478 Time value of money,488,506,511n,541, 544 Total,average,and marginal relationships, 72–76 Total cost,236–246,251–253,256–258, 260–261 Total deadweight loss,345–348,353,690, 697,699–700,722,724 Total economic cost,16,28–30,34,37, 236–237,241,261,320–321,324–325, 351–352 Total fixed cost,237–243,245,247,259–261, 325–327,351,353 Total product of capital,226,229 Total product of labor,201–202,206, 209–211,227,229 Total revenue,46 Total variable cost,237–239,241,243, 245–246,260–261,326–327,353