Vocabulary
Money made beyond the cost of production
Profit
In this economic system, who is controlling the economy?
The government
An arrangement That allows buyers and sellers to exchange things
Market
Economic system that in which the government in involved to some extent
Mixed economy
A person or or group of people living in the same residence
Household
An organization that uses resources to produce a product to sell
Firm
What is another name for a Centrally planned Economy?
Command Economy
An economic system in which decisions are made on production and consumption of goods based on voluntary exchange
Free market system
Doctrine that government shouldn’t really intervene in the marketplace
Laissez faire
The method used by a society to produce and distribute goods and services
Economic Systems
The struggle among producers for the dollars of consumers
Competition
Requiring strict obedience to an authority
Authoritarian
Who answers all the economic questions in a Free Market economy?
The individual/ consumer
What are some benefits the U.S government provides when intervening in the marketplace
Public schools, highways, National Defense, Protection of Rights, and ownership of private property
Economic system that relies on habit, custom, or ritual to make decisions about the production and consumption of goods and services
Traditional Economy
One‘s own personal gain
Self- Interest
A political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government
Communism
The concentration of the productive efforts of individuals and firms limited on a number of activities
Specialization
To sell state fun firms to individuals
Privatization
1. What goods and services should be produced
2. How should goods and services be produced
3. Who consumes these goods and services
The income people receive for supplying their land, labor, or capital
Factor Payments
What are two reasons to why Centrally Planned Economies do not work?
Lack of economic freedom
Little to no innovation (economic growth)
Not the most efficient
What are some advantages of the Free Market?
Efficient: change rapidly due to the want/needs of consumer
Freedom: consumers/ individuals buy, work, and produce what they want
Growth: Free market encourages competition
Government programs that protect people suffering economic hardship
Safety Net
Social and political philosophy based on the beliefs that democratic means should be used to evenly distribute wealth throughout society
Socialism