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Economics
Chapter 2 vocab
| Question | Answer |
|---|---|
| Economic system | the structure of methods and principles that a society uses to produce and distribute goods and services |
| Factor payment | the income of people receive in return for supplying factors of production |
| Profit | the amount of money a business receives in excess of the expenses |
| Safety net | 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 |
| Specialization | the concentration of the productive efforts of individuals and businesses of 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 decide 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 evenly throughout 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 individual freedoms and require strict obedience from their citizens |
| Laissez faire | the doctrine that government generally should not intervene in the marketplace |
| Private property | property that is owned by individuals or companies and not by the government or the people as a whole |
| Mixed economy | a market-based economic system in which the government is involved to some extent |
| Economic transition | a period of change in which a nation moves from one economic's system to another |
| Privatization | the process of selling business or services operated by the government to individual investors, and then allowing them to compare in the marketplace |
| Free enterprise system | an economic system characterized by individual or corporate ownership of capital goods |
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VKimbrell718
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