Prentice Hall. Economics. Principles in Action. Chapter 3. American Free Enterprise. – Flashcards
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profit motive
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the force that encourages people and organizations to improve their material well-being.
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open opportunity
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the concept that everyone can compete in the marketplace
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legal equality
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the concept of giving everyone the same legal rights
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private property rights
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the concept that people have the right and privilege to control their possessions as they wish
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free contract
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the concept that people may decide what agreements they want to enter into
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voluntary exchange
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the concept that people may decide what and when they want to buy and sell
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competition
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the rivalry among sellers to attract customers while lowering costs
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interest group
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a private organization that tries to persuade public officials to act or vote according to group members' interests
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public disclosure laws
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laws requiring companies to provide full information about their products
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public interest
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the concerns of the public as a whole
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macroeconomics
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the study of the behavior and decision making of entire economies
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microeconomics
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the study of the economic behavior and decision making of small units, such as individuals families and businesses
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gross domestic product (GDP)
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the total value of all final goods and services produced in a particular economy
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business cycle
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a period of macroeconomic expansion followed by a period of contraction
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work ethic
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a commitment to the value of work and purposeful activity
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technology
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the process used to produce a good or a service
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public good
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a shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers
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public sector
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the part of the economy that involves the transactions of the government
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private sector
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the part of the economy that involves the transactions of individuals and businesses
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free rider
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someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway if it were provided as a public good
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market failure
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a situation in which the market does not distribute resources efficiently
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externality
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an economic side effect of a good or service that generates benefits or costs to someone other that the person deciding how much to produce or consume
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poverty threshold
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an income level below that which is needed to support families or households
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welfare
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government aid to the poor
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cash transfers
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direct payments of money to eligible poor people
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in-kind benefits
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goods and services provided for free or at greatly reduced prices
