Chapter 2 Flashcards
Factor payment
the income you receive for giving factors of production
Profit
Selling products to gain more money than what a business originally paid for.
Safety net
A government program that helps people who are in unfortunate economics situations.
Standard of living
level of economic prosperity
Innovation
Bringing new ideas into efficient use.
Traditional economy
Type of economy that relies on customs to shape our economy.
What are the three economics question and their answers.
What goods and services should be produced?
How should these goods and services be produced?
Who consumes these goods and services?
Market
An exchange between buyers and sellers
Specialization
A method of production where a business or area focuses on production
Free market economy
A system where the prices for goods and services are set by the consent of the vendors and consumers
Household
People living in a single residence
Firm
An organization that uses resources to produce goods/services
Factor market
the arena of exchange in which firms purchase the factors of production from households
Product market
the arena of exchange in which households purchase goods and services from firms
Self-interest
an individual’s own personal gain