No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Appendix A Definition Index 474 Cartel: a group of firms that enter into an agreement, usually to control output in order to split a monopolist’s profit. A cartel usually features a homogenous product. (Chapter 8—Monopoly/Monopolistic Competition & Oligopoly) Ceteris paribus: “with other things the same,” or, “all else equal.” (Chapter 1— Assumptions) Communism: an economic system where decisions on resource allocation are made collectively by the communist party and are characterized by complete social ownership of all property, both consumer and capital goods. (Chapter 1—Economic Systems) Comparative advantage: An individual (or firm, or country) is said to have a comparative advantage if he or she can produce any good or service at a lower opportunity cost than his or her potential trading partner. (Chapter 2—Increased Production from the Division of Labor) Complements: goods that are usually consumed jointly (at the same time). (Chapter 3—A Deeper Dive into Concepts for Demand) Compliance costs: the time and resources associated with both designing and implementing the internal corporate controls to ensure the business doesn’t break the law. (Chapter 14—Size of Government) Compounding: the process of earning interest upon prior interest earnings. As interest is added to the principal over time, and this total is reinvested, the total rises at a faster rate as you “earn interest on the interest.” (Chapter 12—Loanable Funds Framework) Compound interest: The interest rate is applied more frequently than once per year such that interest payments earlier in the year also accrue interest. (Chapter 16— Valuing the Future—Concepts in Capital and Finance) Consumer surplus: the gain to consumers due to the difference in the maximum price they would be willing to pay (i.e., their reservation price) and what they actually have to pay. (Chapter 3—A Deeper Dive into Concepts for Demand/Consumer Surplus) Contestable markets: When a market has low barriers to entry, even monopolists may behave according to competitive pressures to avoid inviting other entrants to the market. (Chapter 8—Monopoly/Protection from Monopoly) Cost/benefit analysis: the process of evaluating a possible action by comparing the costs of an action to its benefits. (Chapter 1—Assumptions) Crowding out: the impact on the private sector of inflation from the government printing money, which reduces private sector consumption and investment. (Chapter 18—Macroeconomics: Ceteris Is Not So Paribus)