Chapter 3 vocab

Question 1

free enterprise

Answer 1

an economic system in which privately owned businesses have the freedom to operate for a profit with limited government intervention

Question 2

voluntary exchange

Answer 2

act of buyers and sellers freely and willingly engaging in market transactions; a characteristic of capitalism and free enterprise

Question 3

private property rights

Answer 3

fundamental feature of capitalism, which allows individuals to own and control their possessions as they wish

Question 4

profit

Answer 4

difference between the revenue from sales and the full opportunity cost of resources involved in producing sales

Question 5

profit motive

Answer 5

driving force that encourages people and organizations to improve their material well-being

Question 6

consumer sovereignty

Answer 6

role of consumer as ruler of the market in determining the types of goods and services produced

Question 7

fixed income

Answer 7

income that does not increase over time