Economics: Chapter 3
Terms
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- profit motive
- the force that encourages people and organizations to improve their material well-being.
- open oppurtunity
- the concept that everyone can compete in the marketplace.
- legal equality
- the concept of giving everyone the same legal rights.
- private property rights
- the concept that people have the right and privelege to control their possessions as they wish.
- free contract
- the concept that people may decide what agreements they want to enter into.
- competition
- the rivalry among sellers to attract costumers while lowering costs.
- interest group
- a private organization that tries to persuade public officials to act or vote according to group members interests.
- public disclosure laws
- laws requiring companies to provide full information about their products.
- public interest
- the concerns of the public as a whole
- macroeconomics
- the study of the behavior and decision making of entire economies.
- microeconomics
- the study of the economic behavior and decision making of small units, such as individuals, families and businesses.
- gross domestic product (GDP)
- the total value of all final goods and services produced in a particular economy.
- business cycle
- a period of macroeconomic expansion followed by a period of contraction.
- work ethic
- a commitment to the value of work and purposeful activity.
- technology
- the process used to produce a good or service.
- public good
- a shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers.
- 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.
- free rider
- someone who would not choose 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 market 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 to eligible poor people.
- in-kind benefits
- goods and services provieded for free or at greatly reduced prices.