CHPT 3 Definitions

Question 1

Profit Motive

Answer 1

the incentive that drives individuals and business owners to improve to improve their material well-being

Question 2

Open opportunity

Answer 2

the principle that anyone can participate in the marketplace

Question 3

Legal equality

Answer 3

the principle that everyone has the same legal right

Question 4

Private property rights

Answer 4

the principle that people have the right to control their possessions and use them how they want

Question 5

Free contract

Answer 5

the principle that people may decide what agreements they want to enter to

Question 6

Voluntary exchange

Answer 6

the principle that people may decide

Question 7

Interest group

Answer 7

the private organization that tries to persuade private officials to act in ways that benefits its members

Question 8

Patriotism

Answer 8

love for one’s country

Question 9

Eminent domain

Answer 9

the right
of a government to take private property for public use

Question 10

Public interest

Answer 10

the concerns for society as a whole

Question 11

Public disclosure laws

Answer 11

laws requiring companies to provide information about their products of services

Question 12

macroeconomics

Answer 12

the study of economic behavior and decision making in a nation’s whole economy

Question 13

microeconomics

Answer 13

the study of the economic behavior and decision making in small units, such as households and firms

Question 14

gross domestic products

Answer 14

the total value of all final goods and services produces in a country in a given year

Question 15

business cycle

Answer 15

a period of macroeconomic expansion, or growth, followed by one of contraction, or decline

Question 16

referendum

Answer 16

a proposed law submitted directly to the public

Question 17

obsolescence

Answer 17

situation in which older products and processes become out-of-date

Question 18

patent

Answer 18

a government license that gives the inventor of new product the exclusive right to produce and sell it

Question 19

copyright

Answer 19

a government license that gives the inventor of a new product the exclusive rights to publish and sell creative works

Question 20

work ethic

Answer 20

a commitment to the value of work

Question 21

public good

Answer 21

a shared good or service for which it would be inefficient or impractical to make consumers pay individually and to exclude those who did not pay

Question 22

public sector

Answer 22

the part of the economy that involves the transactions of the government

Question 23

private sector

Answer 23

the part of the economy that involves the transactions of individuals and businesses

Question 24

infrastructure

Answer 24

the basic facilities that are the necessary for a society to grow

Question 25

free rider

Answer 25

someone who would not be willing to pay for a certain good or service but who benefits of it anyway if it were provided as a public good

Question 26

market failure

Answer 26

a situation in which the free market operating on its own, doesn’t distribute resources efficiently

Question 27

externality

Answer 27

an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume

Question 28

poverty threshold

Answer 28

an income level below that which is needed to support families or housholds

Question 29

welfare

Answer 29

government aid to the poor

Question 30

cash transfers

Answer 30

direct payments of money by the government to the poor, disabled, or retired people

Question 31

in-kind benefits

Answer 31

goods and services provided for free or at greatly reduced products

Question 32

grant

Answer 32

a financial award given by a government agency to a private individual or group in order to carry out a specific task