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

Appendix A Definition Index 482 Marginal product of labor (MPL): the incremental (additional) output created by adding one unit of labor to the production process while keeping all other factors fixed. (Chapter 7—Structure of Production: Stages of Capital/Production Function) Marginal revenue product: the contribution each productive input makes at the margin, equal to the inputs marginal product multiplied by the marginal revenue of output. (Chapter 7—The Worker is Worth His wage) Marginal social benefit: the benefit to society of an incremental (or additional) unit of a good (in this case government). Note this benefit is a conceptual number; it is impossible to aggregate subjectively assessed benefits to arrive at an actual number. (Chapter 14—What Should Government Do?) Marginal social cost: the cost to society of an incremental (or additional) unit of a good (in this case government). Note this cost is a conceptual number; it is impossible to aggregate subjectively assessed opportunity costs to arrive at an actual number. (Chapter 14—What Should Government Do?) Marginal utility: the incremental (additional) utility (or benefit) to an individual from an additional unit of a good or service. (Chapter 3—Introduction/Concepts for Demand: A Quick Summary) Market-clearing price: In any market, the equilibrium (or market clearing) price allows all producers that want to sell and all consumers who wish to purchase to exchange at that price. (Chapter 6—Market Process Application: Minimum Wage Legislation and Price Floors) Market wage: the wage rate for labor that prevails in competitive markets without government interference. (Chapter 6—Market Process Application: Minimum Wage Legislation and Price Floors) Medium of exchange: the primary function of money as an institution: money is exchanged for goods in markets, eliminating the high transaction costs associated with bartering. (Chapter 11—Functions of Money) Mercantilism: an economic doctrine that supported managed trade to stimulate exports and minimize imports, and keep precious metals circulating within the home country. While an economic doctrine, mercantilism was thought to be a way to ensure national security for a nation by maintaining a higher gold stock. (Chapter 15— Mercantilism vs. Free Trade) Methodological individualism: the assumption that the causal factor of economic action is the individual responding to incentives. (Chapter 1—Assumptions) Microeconomics: the study of how individuals and firms make choices to allocate resources. (Chapter 1—Micro & Macro Economics)