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Glossary of Econ Chapter 3

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Profit Motive
the incentive that drives individuals and business owners to improve their material well-being
Open Opportunity
The principle that anyone can compete in the marketplace
Legal Equality
the principle that everyone has the same legal rights
Private Property Rights
the principle that people have the right to control their possessions and use them as they wish
Free
contract
the principle that people may decide what agreements they want to enter into
Voluntary Exchange
the principle that people may decide what, when, and how they want to buy and sell
Interest Group
a private organization that tries to persuade public officials to act in ways that benefit its members
patriotism
the love of one's country
eminent domain
the right of a government to take private property for public use
public interest
the concerns of society as a whole
public disclosure laws
laws requiring companies to provide information about their products or services
macroeconomics
the study of economic behavior and decision making in a nation's whole economy
microeconomics
the study of the economic behavior and decision making in small units, such as households and firms
gross domestic product
the total value of all final goods and services produced in a country in a given year
business cycle
a period of macroeconomic expansion, or growth, followed by one of contraction, or decline
referendum
a proposed law submitted directly to the public
obsolescence
situation in which older products and processes become out of date
patent
a government license that gives the inventor of a new product the exclusive right to produce and sell it
copyright
a government license that grants an author exclusive rights to publish and sell creative works
work ethic
a commitment to the value of work
public good
a shared good or service for which it would be inefficient or impractical to make consumers pay individually and to exude those who did not pay
public sector
the part of the economy that involves the transactions of the government
private sector
the part of the economy that involves the transactions of individuals and businesses
infrastructure
the basic facilities that are necessary for a society to function and grow
free rider
someone who would not be willing to pay for a certain good or service but who would get the benefits of it anyway if it were provided as a public good
market failure
a situation in which the free market, operating on its own, does not distribute resources efficiently
externality
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
poverty threshold
an income level below that which is needed to support families or households
welfare
government aid to the poor
cash transfers
direct payments of money by the government to poor, disabled, or retired people
in-kind benefits
goods and services provided for a fee or at greatly reduced prices
grant
a financial award given by a government agency to a private individual or group in order to carry out a specific task

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