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

Appendix A Definition Index 484 N Natural monopoly: occurs when an industry faces decreasing average costs over the possible range of production, such that it is more efficient for one firm to produce for the entire market. (Chapter 8—Monopoly) Necessity: a normal good for which demand does not increase much as income increases. (Chapter 3—A Deeper Dive into Concepts for Demand) Negative externality: a cost imposed on others (a 3rd party) that are not part of a market transaction. (Chapter 6—More Market Limitations: Poorly Defined Property Rights) Nominal rigidities: nominal (or money) values of economic variables, such as the price of labor, might be “sticky,” and in the face of some external shock might lead to large employment losses for extended periods. (Chapter 17—Macroeconomics Today) Non-excludability: A good or service is non-excludable if production for one person necessarily makes it available for everyone (such as non-scrambled radio signals). (Chapter 13—Public Goods) Non-rivalrous: A good or service is non-rivalrous if consumption by one individual does not reduce the amount available for any other potential consumer. (Chapter 13— Public Goods) Normal good: a good for which demand increases with an increase in income. (Chapter 3—A Deeper Dive into Concepts for Demand) O Oligopoly: a market structure with few firms and high barriers to entry. (Chapter 8— Monopoly/Monopolistic Competition & Oligopoly) On the margin: the incremental (additional) unit which is the focus of our choice decisions. (Chapter 3—Introduction/Concepts for Demand: A Quick Summary) Open market operations: the Federal Reserves preferred method of conducting monetary policy; open market operations involves increasing or decreasing the level of reserves in the banking system by the Fed’s purchase or sale of assets in the open market. (Chapter 12—Federal Reserve Tools) Opportunity cost: the next best alternative to a given choice—the true sacrifice of any choice. (Chapter 2—How Markets Allocate Scarce Resources) Ordinal utility: Utility can be rank-ordered; that is, an individual can say “I prefer item A to item B.” (Chapter 2—Utility)