the structure of methods and principles a society uses to produce and distribute goods and services
New cards
2
Factor payment
the income people receive in return for supplying factors of production
New cards
3
Profit
the amount of money a business receives in excess of its expenses
New cards
4
Safety net
a set of government programs that protect people who face unfavorable economic conditions
New cards
5
Standard of living
level of economic prosperity
New cards
6
innovation
the process of bringing new methods, products, or ideas into use
New cards
7
Traditional economy
an economic system that relies on habit, custom, or ritual to decide the three key economic questions
New cards
8
Market
any arrangement that allows buyers and sellers to exchange things
New cards
9
Specialization
the concentration of the productive efforts of individuals and firms on a limited number of activities
New cards
10
Free market economy
an economic system in which decisions on the three key economic questions are based on voluntary exchange in markets
New cards
11
Household
a person or group of people living in a single residence
New cards
12
Firm
an organization that uses resources to produce a product, which it then sells
New cards
13
Factor market
the arena of exchange in which firms purchase the factors of production from households
New cards
14
Product market
the arena of exchange in which households purchase goods and services from firms
New cards
15
Self-interest
an individual's own personal gain
New cards
16
incentive
the hope of reward or fear of penalty that encourages a person to behave in a certain way
New cards
17
Competition
the struggle among producers for the dollars of consumers
New cards
18
Invisible hand
a term coined by Adam Smith to describe the self-regulating nature of the marketplace
New cards
19
Consumer sovereignty
the power of consumers to decide what gets produced
New cards
20
Centerally planned economy
an economic system in which the government makes all decisions on the three key economic questions
New cards
21
Command economy
another name for a centrally planned economy
New cards
22
Socialism
a range of economic and political systems based on the belief that wealth should be distributed evenly throughout a society
New cards
23
Communism
a political system in which the government owns and controls all resources and means of production and makes all economic decisions
New cards
24
Authitorian
describing a form of government that limits individual freedoms and requires strict obedience from its citizens
New cards
25
Laissez-faire
the doctrine that the government should not intervene in the marketplace
New cards
26
Private property
property that is owned by individuals or companies, not by the government or the people as a whole
New cards
27
Mixed economy
a market-based economic system in which the government is involved to some extent
New cards
28
Economic transition
a period of change in which a nation moves from one economic system to another
New cards
29
Privatization
the process of selling businesses or services operated by the government to individual investors, and then allowing them to compete in the market place
New cards
30
Free enterprise system
an economic system characterized by private or corporate ownership of capital goods
Studied by 10 people
