economics oct 20

free enterprise system

another name for capitalism,an economic system based on private ownership of productive resourses

Open Opportunity

is the ability of everyone to

take part in the market by

free choice.

Legal Equality

is a situation inwhich

everyone has the same

economic rights under the law.

Free Contract

is a situation inwhich people

decidewhich legal agreements

to enter into.

Profit Motive

is the force that encourages

people and organizations to

improve their materialwell

being from economic activities

profit

the money left over after the costs pf producing a good or service have been subtracted from the revenue gained by selling that good or service

modified free enterprise economy

a free enterpriser economic system with some government involvement.

MARKET FAILURES

occurs when people who are not part of a marketplace interaction benefit from it or pay part of its costs.

PUBLIC GOODS

are products provided by federal, state, & local governments and consumed by the public as a group.

FREE RIDER

is a person who avoids paying for a good or service but who benefits from that good or service anyway.

INFRASTRUCTURE

consists of all the goods and services that are necessary for the functioning of society.

Externality

is a side effect of a product that affects someone other than the producer or the buyer.

Negative Externality

is an externality that imposes costs on people who were not involved in the original economic actvity.

Positive Externality

is an externality that creates benefits for people who were not included in the original economicactivity.

SUBSIDY

is a government payment that helps cover the cost of an economic activity that has the potential to benefit the public as a whole.

Transfer Payments

are transfers of income from one person or group to another even though the receiver does not provide anything in return

Safety Net

consists of government programs designed to protect people from economic hardship.

Public Transfer Payment

is a transfer payment in which the government transfers income from taxpayers to recipients who do not provide anything in return.