Chapter 3 Flashcards
Profit motive
The force that encourages people and organizations to improve their material well-being
Open opportunity
the concept that everyone can compete in the marketplace
Legal equality
The concept of giving everyone the same legal rights
Private property rights
People have the right and privilege to control their possessions as they wish
Free contract
People may decide what agreements they want to enter into
Voluntary exchange
People may decide what and when they want to buy and sell
Competition
Rivalry among sellers to attract customers while lowering costs
Interest group
Private organization that tries to persuade public officials to act or vote according to group members interest
Public disclosure laws
Laws requiring companies to provide full information about their products
Public interest
Concerns of the public as a whole
Macroeconomics
Behavior and decision making of entire economics
Microeconomics
Economic behavior and decision making of small units, such as individuals, families, and businesses
Gross domestic product (GDP)
The total value of all final goods and services produced in a particular economy
Business cycle
Period of macroeconomic expansion followed by a period of contraction
Work ethic
Commitment to the value of work and purposeful activity
Technology
Process used to produce a good or service
Public good
Shared good or service…it would be impractical to make consumers pay individually and to exclude nonpayers
Public sector
Part of economy that involves the transactions of the government
Private sector
Part of economy that involves the transactions of individuals and businesses
Free rider
Someone who would not choose to pay for a certain good or service but gets benefits of it anyway if provided as a public good
Market failure
Market doesn’t distribute resources efficiently
Externality
Economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume
Poverty threshold
Income level below that which is needed to support families or households
Welfare
Government aid to the poor
Cash transfers
Direct payment of money to eligible poor people
In-kind benefits
Goods and services provided for free or at greatly reduced prices
