chap 3 Flashcards
free enterprise system
another name for capitalism, an economic system based on private ownership of productive resources.
open opportunity
the ability of everyone to take part in the market by free choice
legal equality
a situation in which everyone has the same economic rights under the law
free contract
is a situation in which people decide which legal agreements to enter into
profit motive
is the force that encourages people and organizations to improve their material well being from economic activities
profit
is the money left over after the costs of producing a good or service have been subtracted from the revenue gained by selling that product
modified free enterprise economy
a free enterprise economic system with some government involvement.
market failure
this occurs when people who are not part of a marketplace interaction benefit from it or pay part of its costs.
public goods
are products provided by federal, state, and local governments and consumed by the public as a group.
free rider
a person who avoids paying for a good or service but who benefits from that good or service anyway
infrastructure
consists of all the goods and services that are necessary for the functioning of society.
externality
a side effect of a product that affects someone other than the producer or the buyer
negative externality
externality that imposes costs on people who were not involved in the original economic activity
positive externality
externality that creates benefits for people who were not involved in the original economic activity
subsidy
government payment that helps cover the cost of an economic activity that has the potential to benefit the public as a whole.
