Econ Vocab 3 Flashcards
Free enterprise system
the idea that anyone is free to start a business or enterprise
Open opportunity
the ability of everyone to enter and compete in a market place of his or her own free choice
Legal equality
a situation in which everyone has the same economic rights under law
Free contract
the freedom to choose what business, job, or purchase they want to commit to
Profit Motive
the incentive that encourages people and organizations to improve their material well-being by seeking to gain from economic activities
Profit
the money left over after the costs of producing
Modified free enterprise economy
includes some government protections, provisions, and regulations to adjust the free enterprise system.
Market failure
The market crashes because people who are not part of marketplace receive benefits or pay parts of a cost
Public goods
goods and services that are provided by the government and consumed by the public as a group
Free rider
a person who chooses not to pay for a good or service but who benefits from it when it is provided
Ex. Watching fireworks for free
Infrastructure
good and services that are necessary for the smooth functioning of society
Externality
a side effect of a transaction that affects someone other than the producer or the buyer
Negative Externality
an externality that is a negative effect, or cost, for people who were not involved in the original economic activity
Positive Externality
an externality that is a positive effect, or benefit, for people who were not involved in the original economic activity
Subsidy
a government payment that helps cover the cost of an economic activity that is considered to be in the public interest
