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25 Cards in this Set
- Front
- Back
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A particular set of institutional arrangements and a coordinating mechanism
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Economic system
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Government owns most property resources and economic decision making occurs through a central economic plan.
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Command system, Communism, Socialism
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System characterized by the private ownership of resources and the use of markets and prices to coordinate and direct economic activity
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Market system, Capitalism
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Places where buyers and sellers come together to buy and sell goods, services, and resources
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Markets
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Coupled with the freedom to negotiate binding legal contracts, enables individuals and businesses to obtain, use, and dispose of property resources as they see fit.
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Private property
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Ensures that enrepeneurs and private businesses are free to obtain and use economic resources to produce their choices of goods and services and to sell them in their chose markets.
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Freedom of enterprise
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Enables owners to employ or dispose of their property and money as they see fit.
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Freedom of choice
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The motivating force of the various economic units as they express their free choices
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Self-interest
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Freedom of choice exercised in pursuit of monetary return; requires two or more buyers and two or more sellers acting independently
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Competition
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Using the resources of an individual, firm, region, or nation to produce one or a few goods or services rather than the entire range of goods and services
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Specialization
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Human specialization
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Division of labor
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Makes trade easier; money
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Medium of exchange
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Swapping goods for goods
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Barter
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A convenient social invention to facilitate exchanges of goods and services.
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Money
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Cruicial in determining the types and quantities of goods produced.
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Consumer sovereignty
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Consumers spend their income on the goods they are most willing and able to buy
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Dollar votes
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The creation of new products and production methods completely destroys the markey positions of firms that are wedded to existing products and older ways of doing business.
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Creative destruction
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Illustrates the flows of goods and services, resources, and money for a simplified economy in which there is no government.
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Circular flow diagram
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One or more persons occupying a housing unit
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Households
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Commercial establishments that attempt to earn profits for their owners by offering goods and services for sale.
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Businesses
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Business owned and managed by a single person
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Sole proprietorship
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Two or more individuals agree to own and operate a business together
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Partnership
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An independent legal entity that can--on its own behalf--acquire resources, own assets, produce and sell products, incur debts, extend credit, sue and be sued, and otherwise engage in any legal business activity
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Corporation
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The place where the goods and services produced by businesses are bought and sold
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Product market
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Households sell resources to business
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Resource market
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