technology spilloveranexternal benefit
that results when knowledge spreads
among individuals and firms. (p. 738)
time allocationthe decision about
how many hours to spend on different
activities, which leads to a decision
about how much labor to supply.
(p. 695)
tit for tat ingame theory, a strategy
that involves playing cooperatively at
first, then doing whatever the other
player did in the previous period.
(p. 647)
total consumer surplusthe sum of the
individual consumer surplusesof all the
buyers of a good in a market. (p. 485)
total costthe sum of the fixed costand
the variable costof producing a quanti-
ty of output. (p. 548)
total cost curvea graphical representa-
tion of the total cost, showing how total
cost depends on the quantity of output.
(p. 549)
total factor productivitythe amount
of output that can be produced with a
given amount of factor inputs.
(p. 379)
total producer surplusthe sum of the
individual producer surplusesof all the
sellers of a good in a market. (p. 490)
total product curvea graphical repre-
sentation of the production function,
showing how the quantity of output
depends on the quantity of the vari-
able inputfor a given quantity of the
fixed input. (p. 543)
total revenuethe total value of sales
of a good or service (the price of the
good or service multiplied by the
quantity sold). (p. 468)
total surplusthe total net gain to con-
sumers and producers from trading in
a market; the sum of the consumer sur-
plusand the producer surplus.(p. 495)
tradable emissions permitslicensesto
emit limited quantities of pollutants
that can be bought and sold by pol-
luters. (p. 734)
tradewhen individuals provide goods
and services to others and receive
goods and services in return. (p. 23)
trade-offwhen you give up something
in order to have something else. (p. 16)
transaction coststhe expenses of
negotiating and executing a deal.
(p. 225)
underemployedpeople who work part
time because they cannot find full-
time jobs. (p. 120)
unemployedpeople who are actively
looking for work but are not currently
employed. (p. 119)
unemploymentthe total number of
people who are actively looking for
work but aren’t currently employed.
(p. 12)
unemployment ratethe percentage of
the total number of people in the labor
forcewho are unemployed, calculated
asunemployment/(unemployment+
employment). (pp. 12, 119)
unionsorganizations of workers
that try to raise wages and improve
working conditions for their mem-
bers by bargaining collectively.
(p. 713)
unit-elastic the price elasticity of
demand is exactly 1. (p. 467)
unit of accounta measure used to set
prices and make economic calcula-
tions. (p. 233)
unit-of-account costs (of inflation)
costs arising from the way inflation
makes money a less reliable unit of
measurement. (p. 137)
unplanned inventory investment
unplanned changes in inventories,
which occur when actual sales are
more or less than businesses expected;
sales in excess of expectations result
in negative unplanned inventory
investment. (p. 169)
U-shaped average total cost curvea
distinctive graphical representation of
the relationship between output and
average total cost; the average total cost
curve at first falls when output is low
and then rises as output increases.
(p. 553)
utila unit of utility. (p. 512)
utility(of a consumer) a measure of
the satisfaction derived from con-
sumption of goods and services.
(p. 511)
value added (of a producer) the value
of a producer’s sales minus the value
of input purchases. (p. 107)
value of the marginal productthe
value of the additional output gener-
ated by employing one more unit of
a given factor, such as labor.
(p. 684)value of the marginal product curve a
graphical representation showing how
the value of the marginal product of a
factor depends on the quantity of the
factor employed. (p. 684)
variable costa cost that depends on
the quantity of output produced; the
cost of the variable input.(p. 548)
variable inputaninputwhose quantity
the firm can vary at any time (for
example, labor). (p. 542)
velocity of moneythe ratio of nominal
GDPto the money supply.(p. 349)
vicious cycle of deleveragingdescribes
the sequence of events that takes place
when a firm’sasset sales to cover loss-
es produce negative balance sheet effects
on other firms and force creditors to
call in their loans,forcing sales of
more assets and causing further
declines in asset prices. (p. 258)
wasted resources a form of inefficien-
cy in which people expend money,
effort, and time to cope with the
shortages caused by a price ceiling.
(p. 80)
wealth (of a household) the value of
accumulated savings. (p. 224)
wealth effect of a change in the aggre-
gate price levelthe effect on consumer
spendingcaused by the change in the
purchasing power of consumers’ assets
when the aggregate price levelchanges.
A rise in the aggregate price level
decreases the purchasing power of
consumers’ assets, so they decrease
their consumption; a fall in the aggre-
gate price level increases the purchas-
ing power of consumers’ assets, so
they increase their consumption.
(p. 174)
wedgethe difference between the
demand priceof the quantity transacted
and the supply priceof the quantity
transacted for a good when the supply
of the good is legally restricted. Often
created by a quotaor a tax. (p. 91)
willingness to paythe maximum price
a consumer is prepared to pay for a
good. (p. 483)
zero boundthe lower bound of zero
on the nominal interest rate.(p. 339)
zero-profit equilibriuman economic
balance in which each firm makes zero
profit at its profit-maximizing quantity.
(p. 661)GLOSSARY G-13