Economics chapter 3

Free Enterprise

An economic system in which privately owned businesses have the freedom to operate for a profit with limited government intervention.

Voluntary Exchange

Act of buyers and sellers freely and willingly engaging in market transactions; a characteristic of capitalism and free enterprise.

Private Property Rights

Fundamental feature of capitalism, which allows individuals to own and control their possessions as they wish; includes both tangible and intangible property.

Profit

Difference between the revenue from sales and the cost of the resources involved in producing the sales.

Profit Motive

Driving force that encourages people and organizations to improve their material well-beings; characteristics of capitalism and free enterprise.

Competition

The struggle among sellers to attract consumers.

Biofuels

Fuel made from wood, peat, municipal solid waste, straw, corn, tires, landfill gases, fish oils, and other waste.

Great Recession

Severe economic downturn that lasted from late 2007 through mid-2009.

Consumer Sovereignty

Role of consumer as ruler of the market in determining the types of goods and services produced.

Entrepreneur

Risk-taking individual in search of profits; one of four factors of production.

Mixed Economy

Economic system that has some combination of traditional, command, and market economies.

Modified free enterprise economy

Free enterprise market economy where people carry on their economic affairs freely, but are subject to some government intervention and regulation.

Minimum Wage

Lowest legal wage that can be paid to workers.

Social Security

Federal program of disability and retirement benefits that covers most working people.

Medicare

Federal health insurance program for senior citizens, regardless of income.

Inflation

Rise in the general level of prices.

Fixed Income

Income that does not fluctuate over time.