Economics Key Concepts: Market, Public Goods, and Welfare

Profit Motive

the force that encourages people and organizations to improve their material well-being

Open Opportunity

the concept that everyone can compete in the marketplace

Private Property Rights

the concept that people have the right and privilege to control their possessions as they wish

Free Contract

the concept that people may decide what agreements they want to enter into

Voluntary Exchange

the concept that people may decide what and when they want to buy and sell

Competition

the rivalry among sellers to attract customers while lowering costs

Interest Group

a private organization that tries to persuade public officials to act or vote according to group members interests

Public Disclosure Laws

laws requiring companies to provide full information about their products

Public Interest

the concerns of the public as a whole

Macroeconomics

the study of the behavior and decision making of entire economies

Microeconomics

the study if the economic behavior and decision making of small units, such as individuals, families, and business

Gross Domestic Product (GDP)

the total value of all final goods and services produced in a particular economy

Business Cycle

a period of macroeconomic expansion followed by a period of contraction

Work Ethic

a commitment to the value of work and purposeful activity

Technology

the process used to produce a good or service

Public Good

a shared good or service for which it would be impractical to make consumers pay individually

Public Sector

the part of the economy that involves the transactions of the government

Private Sector

the part of the economy that involves the transitions of individuals and businesses

Free Rider

someone who would not choose to pay for a certain good or service but who would get the benefits of it anyway if it were provided as a public good

Market Failure

a situation in which the market does not distribute resources efficiently

Externality

an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume

Poverty Threshold

an income level below that which is needed to support families or households

Welfare

government aid to the poor

Cash Transfers

direct payments of money to eligible poor people

IN-Kind Benefits

goods and services provided for free or at greatly reduced prices