free markets

Question 1

any arrangement that allows buyers & sellers to exchange things

Answer 1

market

Question 2

the concentration of the productive efforts of individuals businesses on a limited number of activities

Answer 2

specialization

Question 3

in a __ answers to the 3 basic economic questions are made by voluntary exchange in markets

Answer 3

free market economy

Question 4

a person or group of people living in a single residence

Answer 4

household

Question 5

a business, or _, is an organization that uses resources to produce a product or service, which it then sells

Answer 5

firm

Question 6

as you can see from the lower half of the model, firms purchase factors of production from households. this arena of exchange is called the __

Answer 6

factor market

Question 7

now look at the top half of the circular flow model. the arena in which households buy the goods and services that firms produce is the __

Answer 7

product market

Question 8

according to __, competition & our own self-interest actually help to keep the marketplace functioning

Answer 8

adam smith

Question 9

own personal gain

Answer 9

self-interest

Question 10

an _ is the hope of reward or fear of penalty that encourages a person to behave in a certain way

Answer 10

incentive

Question 11

economists call this struggle among producers for the dollars of consumers _

Answer 11

competition

Question 12

consumers, in essence, have the power to decide what gets produced

Answer 12

consumer sovereignty