Question | Answer |
Economic Institution | the system of roles and norms that a society develops to govern production, distribution, and consumption of goods and services |
Factors of Production | resources needed to produce goods and services: Land, Labor, Capital, and Entrepreneurship |
Primary Sector | the extraction of raw materials from the environment. Ex: fishing, mining, farming, etc. |
Secondary Sector | the use of raw materials to manufacture goods |
Tertiary Sector | providing services |
Capitalism | factors of production are owned by individuals rather than by the government. Forces of profit and competition regulate economic activity |
Socialism | factors of production are owned by the government, which regulates economic activity |
Law of Supply | producers will supply more products when they can charge higher prices and fewer products when they must charge lower prices |
Law of Demand | consumers will demand more of a product as the product decreases, but will demand less of a product as the price increases |
Laissez-Faire Capitalism | literally, “let the people do as they choose” – pure capitalism |
Free-Enterprise Systems | Minimal interference from government, but there are regulations to protect consumers and promote fair business practices |
Communism | a political and economic system in which property is communally owned |
Totalitarianism | those in power exercise complete authority over the lives of individual citizens |
Corporations | a business organization that is owned by stockholders and is treated by law as if it were an individual person |
Oligopoly | the market situation where a few large companies control an industry |
Protectionism | the use of trade barriers to protect domestic manufacturers from foreign competition |
Free Trade | trade that is not restricted by trade barriers between countries |
Multinational | a corporation that has factories and offices in several countries |
E-Commerce | business conducted over the Internet, based on information instead of the traditional factors of production |