Economics chapter 3

Capitalism

Private citizens own and use the factors of production to make products and generate profits

Free market

When products can be bought and sold without government regulations or interference

Free enterprise

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

Economic freedom, voluntary exchange, private property rights, profit motive, competition

A capitalistic free enterprise economy has 5 important characteristics

Economic freedom

The freedom to choose to buy what you want or to choose your occupation, employer, or to move to another job

Voluntary exchange

Voluntary acts of buyers and sellers freely and willingly engaging in market transactions

Private property rights

Allows people to own and control their possessions as they wish

Profit

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

Profit motive

The incentive to improve your material well being/ what motivates people to risk part of their wealth

Competition

The struggle among sellers to attract consumers with the best products at the lowest price

Biofuels

Fuels whose energy is derived from renewable plant, animal materials, vegetable oils, and industrial waste

Free market capitalist economy

The success of the US has led to many other nations having a ___ ____ _____ _____ , or are transitioning to one

Great recession

Severe economic downturn that lasted from December 2007 till mid 2009

Consumers product safety commission

Set up to protect consumers-established in 1972

Catalyst

Something that stimulates activity among people or other forces

Consumer sovereignty

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

Regulator

Someone or something that controls activities

More, combines

The government spends ____ than all private businesses ________

Minimum wage

The lowest legal wage that can be paid to most workers

Adverse

Unfavorable or harmful

Social security

A federal program of disability and retirement benefits that covers most working people-90% of all workers are in the social security system

Medicare

Federal health insurance program for senior citizens (65) regardless of income

Inflation

Rise in the general level of prices results in workers needing more money to pay for the basics necessities

Fixed income

Income that does not increase over time- makes it harder to pay bills and plan for the future

Accommodate

To allow for