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October 3, 2023 

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NATURAL MONOPOLY: A special type of monopoly that's able to lower its price when it produces and sells a larger quantity. This somewhat remarkable ability results because a natural monopoly uses a great deal of capital. In that capital carries an up front cost that must be paid regardless of production, a natural monopoly can spread these costs over larger quantity--if it produces more. The larger the quantity sold, the lower the cost for each unit. A single natural monopoly is thus able to produce and supply a good at a lower cost, and price, than two or more firms. In other words, if two or more firms try to supply the same good, the market will "naturally" end up with just one.

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INTEREST RATE: The price of funds expressed as a percentage of the total amount loaned or borrowed. This is the cost of borrowing funds and the payment received for lending. Interest rates are invariably expressed as an annual percentage of the amount borrowed/loaned. A 10 percent interest rate, to run through an easy example, tells us that the cost of borrowing $1,000 for one year is $100.

     See also | real interest rate | opportunity cost | risk premium | inflation premium | investment | capital | dividend | financial markets | yield | prime rate | federal funds rate | interest-rate effect | government borrowing | investment borrowing |


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INTEREST RATE, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: October 3, 2023].


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INTERNATIONAL TRADE

The exchange of goods and services among the nations of the world. Also termed foreign trade when viewed from the perspective of a given country, the international exchange of production is comparable to any exchange, except that buyers and sellers are from different countries. The study of international trade highlights an important economic principle, the law of comparative advantage, which helps to explain not only why nations engage in trade but why individuals engage in trade. A related area of study is international finance, both of which are part of the broader study of international economics.

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Today, you are likely to spend a great deal of time touring the new suburban shopping complex looking to buy either clothing for your pet iguana or a set of hubcaps. Be on the lookout for high interest rates.
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