Unit Two Flashcards
Societies face Scarcity
Decisions concerning ‘what,’ ‘how,’ and ‘for whom’ to produce must be made.
Economic System
Is the structure of methods and principles a society uses to produce and distribute goods and services.
Factor Payments
Are the income people receive in return for supplying factors of production - land, labor, and capital.
Profit
Is the amount of money a business receives in excess of its expenses.
Economic Efficiency
Resources are used wisely and that the benefits gained are greater than the costs incurred.
Economic Freedom
The freedom for people to make their own economic decisions, is a goal highly valued in the United States.
Economic Security
A social goal that results in programs to help support the ill, the elderly, and workers who have lost their jobs.
Economic Equity
The social goal that explains why so many people support laws against wage and job discrimination.
Economic Growth
An important goal because populations tend to increase and existing populations tend to want more goods and services.
Innovation
Plays a huge role in economic growth, it’s the process of bringing new methods, products, or ideas into use.
Traditionalist Economies
The oldest and simplest of economic systems is a traditional economy. These reply on habit, custom, ritual to answer the basic questions of econ.
Market
An arrangement that allows buyers and sellers to exchange things.
Specialization
The concentration of the productive efforts of individuals and businesses on a limited number of activities.
Capitalism
Private ownership of the factors of production
Adam Smith
Scottish social philosopher. Published “The Wealth of Nations,” a text that described how markets functioned.
Incentive
Hope of reward or fear of penalty, artificially impact our decision making.
