Economics: Free Enterprise and Other Economic Systems (VOCABULARY Flashcards)

Vocabulary flashcards covering key concepts from the notes on economic systems, including traditional, command, market, and mixed economies, as well as related ideas like public goods, externalities, and fundamental economic questions.

Economic System

The method a society uses to produce and distribute goods and services.

Traditional Economy

An economy based on customs, beliefs, and traditions; often subsistence-based and involving farming or hunting, with production for family use.

Barter Economy

An economy in which goods and services are exchanged directly without money.

Subsistence Farming

Farming aimed at producing enough for a family’s own use with little or no surplus for trade.

Command Economy

An economy in which the government owns resources and decides what to produce, how to produce, and who receives the output.

Public Goods

Goods that are non-excludable and non-rivalrous, often provided by the government for all to use.

Externalities

Costs or benefits of a transaction that affect third parties not directly involved in the market exchange.

Market Economy

An economy where supply and demand determine what is produced and at what price, with limited government intervention.

Free Market/Market System

Another term for a market-based economy emphasizing private enterprise and voluntary exchange.

Mixed Economy

An economy that combines private enterprise with government services and regulation to protect the public and environment.

Four Fundamental Economic Questions

What to produce? How to produce? For whom to produce? How much to produce now vs. later?

Private Property

The right of individuals to own and use resources and assets.

Competition

A market condition with multiple producers, leading to better prices and choices for consumers.

Self-Interest

Individuals act in ways that they believe will best benefit themselves.

Voluntary Exchange

Mutually agreed trades between buyers and sellers, usually determined by price.

Profit Motive

The incentive to earn profits, driving entrepreneurship and production decisions.

Economic Freedom

The right of individuals to choose how to use their resources and engage in economic activities.