Chapter 2 Flashcards
core sphere
households, families, and informal community groups
public purpose sphere
governments and other local, national, and international organizations established for some public purpose beyond individual or family self-interest, operating without the goal of making a profit
public good
a good whose benefits are freely available to anyone, and whose use by one person does not diminish its usefulness to others
business sphere
firms that produce goods and services for profitable sale
informal sphere
businesses, normally small in scale, operating outside government oversight and regulation
market (first meaning)
a place (physical or virtual) where there is a reasonable expectation of finding both buyers and sellers for the same product or service
market (second meaning)
the interaction of buyers and sellers defined within the bounds of broad product categories, such as the market for used cars or the real estate market
market (third meaning)
an economic system (a “market economy”) that relies on markets to conduct many economic activities
laissez-faire economy
an economy with little government regulation
institution
a way of structuring human activities based on customs, infrastructure, and laws
private property
ownership of assets by nongovernment economic actors
explicit contract
a formal, often written agreement that states the terms of an exchange and may be enforceable through a legal system
implicit contract
an informal agreement about the terms of a market exchange, based on verbal discussions or on traditions and normal expectations
physical infrastructure
roads, ports, railroads, warehouses, and other tangible structures that provide the foundation for economic activity
money
a medium of exchange that is widely accepted, durable as a store of value, has minimal handling and storage costs, and serves as a unit of account
