Economics, 3rd Edition

exogenous variable 

a variable whose value is determined 

outside the model

expected utility theory 

the idea that preferences can and 

will be ranked by buyers

explicit costs 

input costs that require an outlay of money by the 

firm

exports 

goods produced domestically and sold abroad leading to 

an inflow of funds into a country

externality 

the cost or benefit of one person’s decision on the 

well-being of a bystander (a third party) which the decision 

maker does not take into account in making the decision

fiat money 

money without intrinsic value that is used as money 

because of government decree

finance 

the field of economics that studies how people make 

decisions regarding the allocation of resources over time and 

the handling of risk