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2020 Unit 2 - Free Enterprise and Other Economic Systems
Terms in this set (40)
the structure of methods and principles a society uses to produce and distribute goods and services. (The way a society answers the 3 basic questions)
the income people receive for supplying factors of production, such as land, labor, or capital
The money a business receives for its products or services in excess of its expenses
An economic goal where a society tries to maximize what they can produce using the resources they have
The economic goal of people being able to make their own choices.
The economic goal of protecting people against uncertainty.
a set of programs to protect people who face unfavorable economic conditions such as layoffs, injuries, or natural disasters.
The economic goal of fairness
The economic goal where the economy must grow with increases in population
Standard of Living
Level of economic prosperity
process of bringing new methods, products, or ideas into use
relies on habit, customer, or ritual to answer the 3 basic economic questions. There is little room for innovation or change.
Any arrangement that allows buyers and sellers to exchange things
The concentration of the productive efforts of individuals and firms on a limited number of activities
(AKA business) an organization that uses resources to produce a product or service which it then sells.
a person or group of people living in a single residence
the arena of exchange in which firms purchase the factors of production from households
the market in which households purchase the goods and services that firms produce
Scottish economist who advocated private enterprise and free trade (1723-1790)
your own personal gain from something
the hope of reward or fear of penalty that encourages a person to behave in a certain way
the struggle of producers for the $'s of consumers
Command Economy (or centrally planned economy)
the government, rather than individual producers and consumers, answer the 3 basic questions
is not a single economic system. It describes a range of economic and political systems based on the belief that wealth should be evenly distributed throughout society.
the central government owns and controls all resources and means of production and makes all economic decisions
limit individual freedoms and require strict obedience from their citizens
the doctrine that government generally should not intervene in the marketplace
property owned by individuals or companies and not by the government or the people as a whole
A product of the intellect, such as an expressed idea or concept, that has commercial value.
A combination of a command and market economy
a period in which a nation moves from one economic system to another
selling enterprises operated by the government to individuals and then allowing them to compete in the marketplace
the power of consumers to decide what gets produced
Free Market Economy
an economic system in which decisions on the three key economic questions are based on voluntary exchange in markets
good or service produced within a country and sold outside the country's borders
a good or service brought in from another country to sell
the ability to produce more of a given product using a given amount of resources
The ability of a country to produce a good at a lower cost than another country can.
law of comparative advantage
the idea that a nation is better off when it produces goods and services for which it has a comparative advantage
the shared need of countries for resources, goods, services, labor, and knowledge supplied by other countries
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