Chapter 2 Flashcards
Government programs that protect people experiencing unfavorable economic conditions
Safety Net
The income people receive for supplying factors of production
Factor Payments
Level of economic prosperity
Standard of Living
Economic system that relies on habit, custom, or ritual to decide questions of productions and consumption of goods and services
Traditional Economy
Economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets
Market Economy
Economic system in which the central government makes all decisions on the production and consumption of goods and services
Centrally Planned Economy
An arrangement that allows buyers and sellers to exchange things
Market
The concentration of the productive efforts of individuals and firms on a limited number of activities
Specialization
A person or a group of people living in the same residence
Household
An organization that uses resources to produce a product, which it then sells
Firm
The financial gain made in a transaction
Profit
One’s own personal gain
Self-Interest
An expectation that encourages people to behave in a certain way
Incentive
The power of consumers to decide what gets produced
Consumer Sovereignty
A social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society
Socialism
