Basics
there is not enough resources to meet everyone's needs and wants
what is a scarcity
the structure of methods and principles a society used to answer the 3 basic questions
what is an economic system
an economic system in which decisions on the 3 questions are based on voluntary exchange
what is a free market
the market system in which the government, rather than the individual, answer the 3 basic questions
what is a command/centrally planned economy
the economic system that has some market based elements and some level of government involvement
what is a mixed market
food, water, shelter, warmth, medicine
what are examples of needs
the amount of money a business receives in excess of its expenses
what is profit
the motivating force in the free market--the push that leads people to act
what is self-interest
which system requires complete revolutionary change to exist
what is communism
there are no true free market/command markets in existence today
what is true/correct
What to make, How Much to make, Who to sell it to
what are the 3 basic questions
freedom, security, efficiency, equity, growth/innovation
what are the economic goals of a society
any arrangement that allows buyers and sellers to exchange things
what is a market
the main cause of why communism/socialism do not work outside of theory
what is people/people are selfish/self-interest
the doctrine that government should generally not intervene in the market
what is laissez faire
the sum of those economic goods that are tangible, scarce, useful and transferable
what is wealth
a set of programs to protect people who face unfavorable economic conditions such as layoffs, injuries, or natural disasters
what is a safety net
the concentration of the productive efforts of individuals and business on a limited number of activities
what is specialization
a political system in which the government owns and controls all resources and means of production and makes all economic decisions
what is communism
keeps order, provides vital services, and promotes general welfare
what is the role of the US government in a free enterprise
the fundamental economics problem
a system that relies on habit, custom, or ritual to decide the 3 basic questions
what is a traditional economy
the struggle between producers for the dollars of consumers
what is competition
not a single economic/political system, but a range of ideals based on the belief that all wealth should be distributed evenly throughout society
what is socialism
every economic system has inherent problems addressing the 3 basic questions, so this fixes that
what is the reason for having mixed economies