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These flashcards cover key concepts related to the market system, its characteristics, and the implications of economic theories discussed in Chapter 2.
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Market System
An economic system where decisions on production and consumption are guided by the interaction of citizens and businesses.
Command Economy
An economic system where the government makes all economic decisions and controls the means of production.
Consumer Sovereignty
The idea that consumer preferences determine the production of goods and services.
Invisible Hand
A metaphor introduced by Adam Smith to describe the self-regulating nature of the marketplace.
Private Property
Legal ownership of resources and goods which allows individuals to use them as they see fit.
Property Rights
Legally enforced rights to use, control, and transfer property.
Profit-and-Loss System
A mechanism in a market economy where profit signals business success and losses signal need for improvement or exit.
Competition
The rivalry among sellers in the market, which drives innovation, improves quality, and keeps prices in check.
Creative Destruction
The process by which new innovation replaces outdated products and services, leading to economic transformation.
Self-Driving Cars
Automated vehicles that are capable of navigating without human input, often cited as an example of creative destruction in the automotive industry.