ECON 102 Lecture Notes - Lecture 19: Market Price, Deadweight Loss, Marginal Cost

• School: University of Illinois
• Department: Economics
• Course: ECON 102
• Professor: Isaac Dilianni--- Universityof Illinois

Document Summary

Econ 102 - lecture 19 - competition (continued) Implicit cost: the opportunity cost of the money spent on all inputs to a production process. Economic profit and loss in the short run. Economic profit: total revenue minus explicit cost and implicit cost. Market competition encourages producers to produce as efficiently as possible. Firms in a competitive market earn zero economic profits. Transaction costs: any costs of going through with an exchange transaction, other than the price of the good itself. An intermediary (middleman) is: a person (or organization) who facilitates an exchange. They help potential traders identify each other, and charge a fee for this service. They buy from one party and sell to another, and profit from the difference in prices. An externality occurs: when an economic activity confers a benefit or imposes a cost on an unrelated third party. A positive externality is a benefit gained by an unrelated third party.