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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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AVERAGE REVENUE AND MARGINAL REVENUE A mathematical connection between average revenue and marginal revenue stating that the change in the average revenue depends on a comparison between average revenue and marginal revenue. For perfect competition, with no market control, marginal revenue is equal to average revenue, and average revenue does not change. For monopoly and other firms with market control, marginal revenue is less than average revenue, and average revenue falls.
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YELLOW CHIPPEROON
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Today, you are likely to spend a great deal of time at a going out of business sale seeking to buy either storage boxes for your computer software CDs or a set of tires. Be on the lookout for empty parking spaces that appear to be near the entrance to a store.
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Two and a half gallons of oil are needed to produce one automobile tire.
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"Nearly all men can stand adversity; but if you want to test a manžs character, give him power. " -- Abraham Lincoln, 16th U.S. President
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