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HOTELLING'S RULE: The notion that efficiency and competitive market forces will lead to an increase of scarcity rent of a finite, exhaustible resource that is equal to the interest rate. The logic behind Hotelling's Rule is that as a finite fossil fuel is depleted, less is available in the future, causing scarcity rent, and thus the resource price, to increase. An increase in the resource price reduces the quantity demanded and conserves more for future consumption. When finite, exhaustible resource markets are competitive, this process generates an efficient allocation over time.
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MARGINAL COST AND LAW OF DIMINISHING MARGINAL RETURNS Decreasing then increasing marginal cost, reflected by a U-shaped marginal cost curve, is the result of increasing then decreasing marginal returns. In particular the decreasing marginal returns is caused by the law of diminishing marginal returns. As such, the law of diminishing marginal returns affects not only the short-run production of a firm but also the cost of short-run production. This translates into a positively-sloped supply curve for profit-maximizing competitive firms.
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BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time at a dollar discount store seeking to buy either a box of multi-colored, plastic paper clips or several orange mixing bowls. Be on the lookout for broken fingernail clippers.
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In the Middle Ages, pepper was used for bartering, and it was often more valuable and stable in value than gold.
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"Plans are only good intentions unless they immediately degenerate into hard work." -- Peter Drucker, management consultant
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MP
Marginal Product
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