Chapter 2 Flashcards
Who is Adam Smith?
Free Market Philosopher
Economic system
The method uses by a society to produce and distribute goods and services
What are the three economic questions?
What goods and service should be produced?
How should the goods and services be produced?
Who consumes the goods and services produced?
Factor Payment
The income people receive for supplying factors of production such as land labor and capital
Economic effiency
Most amount of output for the least amount of input
Economic Freedom
Freedom from govt intervention in the production of goods ad services and freedom to pursue the career of your choice
Economic Security/predictability
The ability to get goods and services when needed or wanted
Invisible hand
Describe the self regulating nature of the market
Consumer sovereignty
Power of the consumer to decide what get produced
Product market
Households purchase the goods and services that firms produce
Factor market
Firms purchase the factors if production from households
