US Government

chapters 12-14 magruders

An economic system in which individuals are free to own the means of production and maximize profits.

Capitalism

Certain resources are necessary to any nation’s economy, no matter the economic system. Give the name economists call these basic resources which are used to make all goods and services.

Factors of Production

This has a variety of economic uses, such as agriculture, mining, forestry, and is also an important factor of production. Economics categorize this as farms and other property, water in rivers and lakes, and the coal, iron, and petroleum found beneath the ground.

Land

A factor in production which encompasses all the human-made resources that are made to produce goods and services.

Capital

“Capital goods,” or also called this, includes the buildings, machines, computers, and other materials workers need to turn land and another factor, labor, into goods and services.

Physical Capital

A factor of production that is a human resources. This includes men and women who work in mines, factories, offices, and more.

Labor

This type of capital includes the knowledge and skills that workers gain from their work experiences.

Human Capital

One who owns capital and puts it to productive use is called this. The term is applied to people who own large businesses of factories as well as investors and the owners of small businesses.

Capitalist

This person is an individual with the drive and ambition to combine land, labor, and capital resources to produce goods or offer services, and is willing to risk losses and failure.

Entrepreneur

Capitalism is often referred to as this, which is an economic system characterized by private ownership of capital and by investments that are determined by private decision, not by public authorities.

Free Enterprise System

A free enterprise system needs this, which is a market in which buyers and sellers are allowed to buy and sell as they wish. This type of market is most likely to exist in a democratic nation, such as the US, where security and rule of law are protected by the government.

Free Market

A free enterprise system lets consumers, entrepreneurs, and workers enjoy this. Consumers can choose from a variety of products and services, entrepreneurs can switch from one business to another, and workers can quit their jobs and seek new ones.

Freedom of Choice

Workers have the freedom to organize these as a way to bargain for better working conditions or benefits.

Labor Unions

Items people buy and the things workers do for others or the community.

Goods and Services

What type of system is based on these four fundamental factors: private ownership, individual initiative, profit, and competition?

Capitalistic System (Free Enterprise System)

The protection of the rights of private ownership is important, especially in the US. These two amendments declare that no person may be deprived “of life, liberty, or property, without due process of law.”

5th and 14th Amendments

This amendment states that “just compensation” must be paid to owners when their private property is taken for some public use.

5th Amendment

In some countries, these people decide what will be produced and how it will be made. In these countries, centralized decision making, not individual initiative, controls the production and distribution of goods and services.

Government Planners

This is the desire to gain from business dealings. It drives entrepreneurs to create goods and services people will want to buy, and is a major reason why entrepreneurs are willing to take risks.

Profit Motive

A situation in which a number of companies offer similar products or services, causing them to battle each other for customers.

Competition

This often helps to hold down prices and keep quality high, as customers become more likely to buy from the company with the best product at the lowest price.

Competition

Under competitive conditions, this determines the market prices for goods or services. It states that as the price falls, more of a product will be desired by buyers, as the quantity of goods increases and the demand remains the same, prices will fall. And, if demand increases and the quantity of goods remains the same, prices will rise.

Law of Supply and Demand

The quantity of goods or services available for sale at a range of prices.

Supply

Buyers’ desire and ability to purchase a good or service.

Demand