Economics Unit 2

Economy

A system for coordinating a society’s productive and consumptive activities

Economic Structure

The structure of methods and principles a society uses to produce and distribute goods and services.

Factor Payment

The income received for supplying factors of production like labor, capital, land, and entrepreneurship.

Profit

An amount of money that you gain when you are paid more for something than it cost you to make, get, or do it.

Safety Net

Policies and programs that help individuals and families manage risk

Standard of Living

The material well being of the average person in a given population.

Innovation

The development of ideas

Traditional Economy

Those in which customs and traditions are more important than money

Market

Any place where two or more parties can meet to engage in an economic transaction

Specialization

The process wherein a company or individual decides to focus their labor on a specific type of production

Free Market Economy

The laws of supply and demand provide the sole basis for the economic system, without government intervention

Incentive

Benefits or costs of an action that influence people's decisions and behavior

Competition

Various sellers each try to offer better products, lower prices, and other advantages to choosing their wares over a rival's.

Adam Smith/Invisible Hand

Metaphor that describes the unseen forces of self-interest that impact the free market.

Consumer sovereignty

The idea that consumers hold the power to influence production decisions, based on what goods and services they purchase

Command Economies

A centralized government controls the means of production and determines output levels.

Socialism

An economic system in which major industries are owned by workers rather than by private businesses.

Communism

A political and economic system that seeks to create a classless society in which the major means of production, such as mines and factories, are owned and controlled by the public.

Economic Transition

Countries which are undertaking macroeconomic reforms in an attempt to alter the ways in which their economies are managed.

Privatization

A government-owned business, operation, or property becomes owned by a private, nongovernment party.

Nationalization

The process of taking privately-controlled companies, industries, or assets and putting them under the control of the government

Mixed Economies

An economy organized with some free-market elements and some socialistic elements

Private Property

The ownership of property by private parties

Intellectual Property

Any intellectual creation, such as literary works, artistic works, inventions, designs, symbols, names, images, computer code, etc