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Economic System

way in which a nation uses it resources to satisfy needs and wants

Distribution of Income

money payment for work, the amount of healthcare, education, food, and so on, that each person receives; distribution of goods and services among all members of an economic system

Traditional Economic System

system in which decisions are based on customs, beliefs, and ways of doing things that have been handed down from generation to generation

Market Economic System

system in which individuals own the factors of production and make economic decisions through free interaction while looking out for their own best interests

Command Economic System

system in which the government controls the factors of production and makes all decisions of their use

Market

freely chosen activity between buyers and sellers of goods and services in which business is done with those who best satisfy the needs and wants of those involved

Mixed Economy

system combing characteristics of more than one type of economy with others so that the mix varies and the economic system created leans more toward one pure type than another

Capitalism

economic system in which private individuals own the factors of production and decide how to use them with the limits of the law

Private Property

whatever is owned by the individuals or groups rather than the federal, state, or local governments

Profit

money left after all the costs of productions - wages, rent interest, and taxes have been paid

Profit Incentive

desire to make money that motivates people to produce and sell goods and services that others want to buy

Competition

rivalry among producers or sellers of similar goods and services to win more business by offering the lowest price or better quality

Equity

that which is fair and just

Standard of Living

material well-being of an individual, group, or nation measured by the average value of goods and services used by the average citizen during a given time period

Invisible Hand

term used by Adam Smith to describe the effect of competition in guiding individuals toward working for their own self-interest, thereby achieving the maximum good for society

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