Chapter 3 Vocab Flashcards
capitalism
an economics system based on the market in which the ownership of the means of production resides with a small group of individuals called capitalists.
business
private producing units in our society.
consumer sovereignty
the consumer’s wishes determine what’s produced.
corporations
businesses that are treated as a person, and are legally owned by their stockholders, who are not liable for the actions of the corporate “person”
demerit goods or activities
goods or activities that government believes are bad for people even though they choose to use the goods or engage in the activities.
entrepreneurship
ability to organize and get something done.
externality
the effect of a decision on a third party not taken into account by the decision maker
global corporations
corporations with substantial operations on both the production and sales sides in more than one country.
government failures
situations in which the government intervenes and makes things worse.
households
group of individuals living together and making joint decisions.
institutions
the formal and informal rules that constrain human economic behavior.
macroeconomics externalities
externalities that affect the levels of unemployment, inflation, or growth in the economy as a whole.
market economy
an economic system cased on private property and market in which, in principle, individuals decide how, what and for whom to produce.
market failures
situations in which the market does not lead to a desired result.
merit goods or activities
goods and activities that government believes are good for you even though you may not choose to engage in the activities or to consumer the goods.