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Glossary of Economics; Principles and Practices Chapter 3, Section 3

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Capitalism
A system in which private citizens own the factors of production.
Competition
A struggle among sellers to attract consumers while lowering costs.
Free enterprise economy
Competition is allowed to flourish with a minimum of government interference.
Economic freedom
The freedom to choose one's occupation and employer. People can choose to have their own business or to work for someone else. They can apply for jobs, and they have the right to accept or reject employment if offered.
Voluntary exchange
The act of buyers and sellers freely and willingly engaging in market transactions. Both the buyer and seller are better off after the exchange has been made than before the exchange.
Private property
The concept that people have the right and privilege to control their possessions as they wish.
Profit and Profit/Motive
Profit- the extent to which persons or organizations are better off at the end of a period than they were at the beginning.
Profit motive- The driving force that encourages people and organizations to improve their material material well-being
Role of Entrepreneur
Organizes and manages land, labor, and capital in order to seek the reward called profit.
Role of consumer
Determine which products are ultimately produced
Consumer Sovereignty
Describes the consumer as the "ruler" of the market
Role of Government
Justified whenever its benefits outweigh its costs
Protector
The US Government enforces laws such as those against false and misleading advertising, impure food and drugs, environmental hazards, and unsafe automobiles.
Provider and consumer
Govt. provides things like parks and such, and consumes factors of production just like any other form of business.
Regulator
National government is charged with preserving competition in the marketplace.
Promoter of National Goals
Government reflects the will of a majority of its people.
Mixed Economy and Modified Private Enterprise Economy
One in which people carry on their economic affairs freely but are subject to some government intervention and regulation.

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