Ch.3

Question 1

mixed economy

Answer 1

a system that combines a goods measure of free enterprise in some areas with heavy state regulation in others

Question 2

labor

Answer 2

any work that contributes to the production of goods and services

Question 3

subsistence economy

Answer 3

an economic system that provides barely enough to keep a society alive

Question 4

private capitalism

Answer 4

economic system in which the majority of a nation’s capital is owned and controlled by private individuals with businesses

Question 5

state capitalism

Answer 5

a system in which the owner of much of a nation’s capital is a powerful, centralized apparatus called the collectivist state

Question 6

capitalist

Answer 6

an individual who own capital good or owns a share of some business that produces goods

Question 7

entreprenuer

Answer 7

a person who undertakes the management and financial risk of an economic enterprise

Question 8

factors of production

Answer 8

1. natural resources
2. labor
3. capital
4. entrepreneurship
5. information

Question 9

information

Answer 9

facts and figures used to enhance the combination of the factors of production

Question 10

cyber economy

Answer 10

system that emphasizes the role that information plays in its use with the factors of production

Question 11

economic successes depends on

Answer 11

the intelligent combination of the factors of production

Question 12

traditional economy

Answer 12

an economic system in which decisions involving the production, distribution, and consumption of goods are based upon custom heredity and caste

Question 13

common economy

Answer 13

economic system in which a centralized authority controls the production, distribution, and consumption of goods as well as savings, investments, and prices; also called planned or directed economy

Question 14

free enterprise economy

Answer 14

a system in which people are free to make their own economic choices; also called market economy

Question 15

natural resources

Answer 15

land and other raw materials that can be used in the production process.

Question 16

raw materials can be

Answer 16

mineral, from animals, or from plants

Question 17

the industrial revolution

Answer 17

began: England 1760
freed many people from working the land because of labor saving devices

Question 18

labor

Answer 18

any work that contributes to the production of goods and services.

Question 19

free labor vs forced

Answer 19

free:
-More productive
-More motivating to work for your own advantage
-Better attitudes
-Wages based on skill
-Usually market economies

forced:
-Fixed wages
-Can’t have free labor unions
-Usually command economies

Question 20

labor is more efficient in

Answer 20

economies that offer substantial rewards for good work

Question 21

for successful production

Answer 21

skill and personal competence are required. leads to higher wages and salaries

Question 22

a lack of capital goods

Answer 22

less consumer goods and more poverty

Question 23

private capitalism and state capitalism

Answer 23

allow for productive interprises

Question 24

capitalists of paid

Answer 24

dividends/ interest for the use of their capital rather than being apart of the business that uses their capital.

Question 25

Robinson Crusoe

Answer 25

was a capitalist because he used capital goods to survive for more than 28 years. For example, he used a raft to transport necessary items, chests to store food and other supplies, carpenter’s tools, and hunting supplies.

Question 26

entrepreneurship

Answer 26

the intelligent direction and supervision of natural and human economic resources.

Question 27

entrepreneurs

Answer 27

join together the production factors and makes possible large-scale production and distribution. take risks because they could either fail the demands of the market and be ruined or they could succeed and grow rich

Question 28

E.I du Pont

Answer 28

live: 1771-1834 entrepreneur because: He recognized that America needed better gunpowder and that he could make it for a low price and make a large profit, so he became a gunpowder entrepreneur. From this idea, he took action and set up a powder mill. Over the years he was able to greatly increase his profit. Du Pont’s descendants built on what their ancestors’ accomplishments. The du Ponts skillfully managed their business and took risks.

Question 29

the proficiency of a market economy is owed to

Answer 29

capitalism's basic components: property rights, freedom of enterprise and competition in a market environment, and limited government

Question 30

cornerstone of capitalism

Answer 30

the right of the individual to own property

Question 31

property rights

Answer 31

gives people the incentive to invest, save, build, create, and take entrepreneurial risks

Question 32

real property

Answer 32

tangible items, such as land and buildings, owned by firms or individuals

Question 33

financial property

Answer 33

money-based items such as cash, savings accounts, and other investments, that are owned by firms or individuals

Question 34

intellectual property

Answer 34

items that result from creative labor, such as songs or computer programs

Question 35

freedom of enterprise and competition

Answer 35

allows people to use their property how they want. only possible with a limited government

Question 36

majority of the economic decisions in a free market

Answer 36

are made by private households and private businesses

Question 37

resource market

Answer 37

that part of a market in which factors of production are sold

Question 38

product market

Answer 38

the part of the market in which consumer products are sold

Question 39

without free market

Answer 39

there is not enough information to make sound decisions. As people come together, share their knowledge and resources, and make informed choices, they form an enterprising economy working to benefit all.

Question 40

I, Pencil

Answer 40

This essay highlights the fact that the making of a pencil and any other goods is a complex process. Many skilled laborers are involved. An invisible hand brings people, with many different skills who are working to earn money, to help in the process of making something like a pencil. People should have faith in the free man to respond to the invisible hand.