14 terms

Econ: Unit 1 Vocabulary, Set 2

Unit 1 Fundamental Economics vocabulary for Georgia schools. Aligned with GPS.
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Terms in this set (...)

mixed economy
A blend of market and command economies. Individuals, firms, and the government all have the right to own property. Laws determine how disputes about property are resolved. Entrepreneurs can freely start businesses. Businesses produce goods that consumers want. Competition is encouraged in a mixed
economy, unless there is a compelling reason to allow a monopoly.
safety net
government programs that protect people from experiencing unfavorable economic conditions (ex: unemployment benefits, social security checks, welfare programs)
competition
the struggle among producers for the dollars of consumers; means lower prices, higher quality, and more variety for consumers
consumer sovreignty
the power of consumers to decide what gets produced; exists in mixed and free market economies
private ownership
property owned by individuals or companies, not by the government or the people as a whole
profit motive
the force that encourages people and organizations to improve their material well-being
firm
an organization that uses resources to produce a product which it then sells; a business
public good or service
a shared good or service for which it would be impractical to make consumers pay individually and to exclude non-payers (ex: parks, highways, library, police protection, military, public schools)
traditional economy
In this economy, economic decisions are made based on history and tradition. The goods and services provided by people are most likely the same goods and services their ancestors provided to people. Production and distribution of goods and services are based on how past generations made and distributed goods. The consumer will have little control in what is produced.
market economy
This is also called a capitalistic or free-market system. In a market system, private individuals
and firms control all resources, and the price and quantity of all goods are determined by the interaction of demand and supply. Ownership of property and goods is determined in the private sector, and the government does nothing to interfere with any market.
command economy
The opposite of a market economy. The government controls all markets, determining what to produce, how to produce, and for whom to produce. Centralized planning committees take into account all the resources a nation has to offer (labor, land, and capital) and then set up an economic system to produce this predetermined mixture of goods and services. Since the government is in charge of everything, citizens should all receive equal amounts of basic goods and services. In theory, this means that there should be no problems with high unemployment or poverty. There is little to no competition among individual firms so there is little incentive to innovate, increase quality, or lower prices.
government regulation
the act of controlling business behavior through a set of rules or laws via the government
deregulation
when the government stops controlling business behavior via rules or laws; increases competition
market failure
a situation in which a market left on its own fails to allocate resources efficiently; for example, the market on its own will not provide jobless benefits or clean up polluted rivers.

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