Advantages of the Free Enterprise System
the force that encourages people and organizations to improve their material well being from economic activities
profit motive
a free enterprise economic system with some government involvement
modified free enterprise economy
an externality that creates benefits for people who were not involved in the original economic activity
positive externality
a government payment that helps cover the cost of an economic activity that has the potential to benefit the public as a whole
subsidy
are transfers of income from one person or group to another even though the receiver does not provide anything in return
transfer payment
a situation in which people decide which legal agreements to enter into
free contract
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
profit
a side effect of a product that affects someone other than the producer or the buyer
externality
give an example of a subsidy
flu shots
Vaccinations
consists of government programs designed to protect people from economic hardships
safety net
the ability of everyone to take part in the market by free choice
open opportunity
the government is a _______________ in the resource market, spending money to buy the factors of production
consumer
an externality that imposes costs on people who were not involved in the original economic activity
negative externality
consists of all the goods and services that are necessary for the functioning of society
infrastructure
a transfer payment in which the government transfers income from taxpayers to recipients who do not provide anything in return
public transfer payment
a situation in which everyone has the same economic rights under the law
legal equality
the government is a consumer in the _______________ market, spending money in exchange for products
product
products provided by federal, state, and local governments and consumed by the public as a group
public goods
give one example of infrastructure
mass transit
power
water
sewer systems
education
health care systems
give an example of a public transfer payment
Social Security
Medicare
Medicaid
Unemployment compensation
Supplemental Security Income
Veteran's benefits
Food Stamps
Temporary Assistance for needy families
another name for capitalism, an economic system based on private ownership of productive resources
free enterprise system
the government is located in the center of the ____________ ___________ model
circular
occurs when people who are not part of a marketplace interaction benefit from it or pay part of its costs
market failure
a person who avoids paying for a good or service but who benefits from that good or service anyway
free rider
give an example of a public transfer payment
social security
Medicare
Medicaid
Unemployment compensation
Supplemental Security Income
Veteran's benefits
Food Stamps
Temporary Assistance for needy families