________ increase the profitability of inventions, encouraging firms to develop new products and production processes.
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market system
The ________ is based on exchanges between strangers.
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Innovation
________: A specialized worker gains insights into a particular task that leads to better production methods.
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Insurance
________ reduces the risk entrepreneurs face.
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Adam Smith
________ noted that specialization actually increased productivity through the division of labor.
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Repetition
________: The more times a worker performs a particular task, the more proficient the worker becomes at that task.
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export
A(n) ________ is a product produced in the home country and sold in another country.
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safety net
A(n) ________ is created to guarantee a minimum income to people who suffer from job losses, poor health, or bad luck.
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Principle of Voluntary Exchange
________: a voluntary exchange between two people makes both people better off.
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division of labor
Differences in productivity result from differences in innate skills and the beliefs associated with the ________.
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relative scarcity
Prices provide signals about the ________ of a product and help an economy respond to scarcity.
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Principle of Opportunity Cost
________: The opportunity cost of something is what you sacrifice to get it.
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Specialization
________ and exchange result from differences in productivity that lead to comparative advantage.
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Absolute Advantage
________: The ability of one person or nation to produce a product at a lower resource cost than another person or nation.
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Private insurance
________ works when enough low- risk people purchase insurance to cover the costs of reimbursing the high- risk people.
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market system
Under a(n) ________, decisions are guided by prices of inputs and outputs and made by the millions of people who already have information about consumers desires, production technology, and resources.
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safety net
The ________ includes programs that redistribute income from rich to poor, from the employed to the unemployed.
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market system
In a(n) ________, prices provide individuals with the information they need to make decisions.
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Flashcard (75)