A thermodynamic model of signal transduction that incorporates the possibility of multiple conformational states between the inactive and the active forms of the receptor was developed. The obtained equilibrium model is equivalent to the extended ternary complex of Samama et al. (J. Biol. Chem. 268 (1993) 4625-4636) if only two states of the receptor exist. These multiple equilibria between receptor states are modeled by two sets of equilibrium constants: K(piAR) and K(sigma piAR), in the presence of the ligand; and K(piR) and K(sigma piR), in the absence of the ligand. The higher the value of these constants, the more efficiently the active form of the receptor is generated. Intrinsic efficacy of the agonist is defined in the present formulation as the molecular processes induced by ligands in the receptor that lead to the active form of the receptor. Both the energetics (associated to K[piAR]) and mechanism of the process of receptor activation (associated to K[sigma piAR]) are important in eliciting the maximum response. Moreover, analytical expressions of basal activity, potency and maximum response were obtained. These definitions were used to classify the extra cellular ligand as agonists (K[sigma piAR] > K[sigma piR]), inverse agonists (K[sigma piR] > K[sigma piAR] > 0), neutral antagonists (K[sigma piAR] = K[sigma piR]), and pure antagonists.