Chapter 3 Flashcards
(19 cards)
Free Enterprise System
another name for capitalism, an economic system based on private ownership of productive resources
Open Opportunity
the ability of everyone to take part in the market by free choice
Legal Equality
a situation in which everyone has the same economic rights under the law
Free Contract
a situation which people decide which legal agreements to enter into
Profit Motive
the force that encourages people and organizations to improve their material well being from economic activities
Promoter of Free Markets
Milton Friedman believed that the gov’s most important role was to control the amount of money in circulation, easing government restrictions in other areas
Profit
the money left over after the costs of producing a good or service have been subtracted from the revenue gained by selling that good or service.
Modified Free Enterprise Economy
free enterprise economic system with some government involvement
Market Failure
when people who are not part of a marketplace interaction benefit from it or pay part of its costs
Public Goods
products provided by federal, state, and local governments and consumed by the public as a group
Free Rider
person who avoids paying for a good or service but who benefits anyways
Infrastructure
all goods and services necessary for the functioning of a society
Externality
a side effect of a product that affects someone other than the producer or the buyer
Negative Externality
an externality that imposes costs on people who were not involved in the original economic activity
Positive Externality
an externality that creates benefits 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 has the potential to benefit the public as a whole
Safety Net
government programs designed to protect people from economic hardship
Transfer payments
transfers of income from one person or group to another even though the receiver does not provide anything in return
Public Transfer payment
a transfer payment in which the government transfers income from taxpayers to recipients who do not provide anything in return
