Economics Chapter 3 Vocab Answers – Flashcards
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free enterprise system
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another name for capitalism; an economic system based on private ownership of productive resources
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open opportunity
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the ability of everyone to take part in the market by free choice
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legal equality
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a situation in which everyone has the same economic rights under the law
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free contract
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a situation in which people decide which legal agreements to enter into
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profit motive
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the force that encourages people and organizations to improve their material well being from economic activities
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profit
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the money left over after the costs of producing a good or service have been subtracted from the revenue gained by selling that good or service
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modified free enterprise economy
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a free enterprise economic system with some government involvement
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market failure
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occurs when people who are not part of a marketplace interaction benefit from it or pay part of its costs
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public goods
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products provided by federal, state, and local governments and consumed by the public as a group
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free rider
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a person who avoids paying for a good or service but who benefits from that good or service anyway
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infrastructure
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consists of all the goods and services that are necessary for the functioning of society
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externality
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a side effect of a product that affects someone other than the producer or the buyer
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negative externality
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an externality that imposes costs on people who were not involved in the original economic activity
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positive externality
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an externality that creates benefits for people who were not involved in the original economic activity
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subsidy
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a government payment that helps cover the cost of an economic activity that has the potential to benefit the public as a whole
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safety net
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consists of government programs designed to protect people from economic hardship
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transfer payments
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transfers of income from one person or group to another even though the receiver does not provide anything in return
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public transfer payment
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a transfer payment in which the government transfers income from taxpayers to recipients who do not provide anything in return
