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MGE Terms
Terms
| Term | Definition |
|---|---|
| Economic System | The structure of methods and principles that a society uses to produce and distribute goods and services |
| Factor Payment | The income people receive in return for supplying factors of production |
| Profit | The amount of money a business receives in excess of its expenses |
| Safety Set | A set of government programs that protect people who face unfavorable economic conditions |
| Standard of Living | Level of economic prosperity |
| Innovation | The process of bringing new methods, products, or ideas into use. |
| Traditional Economy | An economic system that relies on habit, custom, or ritual to decide the three key economic questions. |
| Market | Any arrangement that allows buyers and sellers to exchange things. |
| Specialization | The concentration of the productive efforts of individuals ans businesses on a limited number of activities |
| Free Market Economy | An economic system in which decisions on the three key economic questions are based on voluntary exchange in markets |
| Household | A person or group of people living in a single residence |
| Firm | An organization that uses resources to produce a product or service, which it then sells |
| Factor Market | The arena of exchange in which firms purchase the factors of production from households |
| Product Market | The arena of exchange in which households purchase goods and services from firms |
| Self-interest | An individual's own personal gain |
| Incentive | The hope of reward or fear of penalty that encourages a person to behave in a certain way |
| Competition | The struggle among producers for the dollars of consumers |
| Invisible Hand | A term coined by Adam Smith to describe the self-regulating nature of the marketplace |
| Consumer Sovereignty | The power of consumers to decide what gets produced |
| Centrally Planned Economy | An economic system in which the government makes all decisions on the three key economic questions |
| Command Economy | Another name for a centrally planned economy |
| Socialism | A range of economic and political systems based on the belief that wealth should be distributed evenly throughout a society |
| Communism | A political system in which the government owns and controls all resources and means of production and makes all economic decisions |
| Authoritarian | Describes a form of government that limits individuals freedoms and requires strict obedience from its citizens. |
Created by:
HunterEsq
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