Menu costs
How much it costs to change prices. just as a restaurant has to print a new menu when it changes the price of its food, so many other firms face a substantial outlay each time they cut or raise what they charge. such menu costs mean that firms may be reluctant to change their prices every time there is a shift in the balance of supply and demand, so there will be sticky prices and the market for their output will be in disequilibrium. The internet may sharply reduce menu costs as it allows prices to be changed at the click of a mouse, which may improve efficiency by keeping markets more often in equilibrium
X-efficiency
Producing output at the minimum possible cost. this is not enough to ensure the best sort of economic efficiency, which maximizes society’s total consumer plus producer surplus, because the quantity of output produced may not be ideal. for instance, a monopoly can be an x-efficient producer, but in order to maximize its profit it may produce a different quantity of output than there would be in a surplus-maximizing market with perfect competition.
When people are misled by inflation into thinking that they are getting richer, when in fact the value of money is declining. Whether, and how much, people are fooled by inflation is much debated by economists. Money illusion, a phrase coined by Keynes, is used by some economists to argue that a small amount of inflation may not be a bad thing and could even be beneficial, helping to “grease the wheels” of the economy. Because of money illusion, workers like to see their nominal wages rise, giving them the illusion that their circumstances are improving, even though in real (inflation-adjusted) terms they may be no better off. During periods of high inflation double-digit pay rises (as well as, say, big increases in the value of their homes) can make people feel richer even if they are not really better off. When inflation is low, growth in real incomes may hardly register.
Monopsony
A market dominated by a single buyer. A monopolist has the market power to set the price of whatever it is buying (from raw materials to labor). Under perfect competition, by contrast, no individual buyer is big enough to affect the market price of anything
The speed with which money whizzes around the economy, or, put another way, the number of times it changes hands. Technically, it is measured as gnp divided by the money supply (pick your own definition). it is an important ingredient of the quantity theory of money.
