Economics Chapter 2 Vocab

the structure of methods and principles a society uses to produce and distribute goods and services

the income people receive in return for supplying factors of production

the amount of money a business receives in excess of its expenses

a set of government programs that protect people who face unfavorable economic conditions

level of economic prosperity

the process of bringing new methods, products, or ideas into use

an economic system that relies on habit, custom, or ritual to decide the three key economic questions

any arrangement that allows buyers and sellers to exchange things

the concentration of the productive efforts of individuals and firms on a limited number of activities

an economic system in which decisions on the three key economic questions are based on voluntary exchange in markets

a person or group of people living in a single residence

an organization that uses resources to produce a product, which it then sells

the arena of exchange in which firms purchase the factors of production from households

the arena of exchange in which households purchase goods and services from firms

an individual's own personal gain

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

the struggle among producers for the dollars of consumers

a term coined by Adam Smith to describe the self-regulating nature of the marketplace

the power of consumers to decide what gets produced

an economic system in which the government makes all decisions on the three key economic questions

another name for a centrally planned economy

a range of economic and political systems based on the belief that wealth should be distributed evenly throughout a society

a political system in which the government owns and controls all resources and means of production and makes all economic decisions

describing a form of government that limits individual freedoms and requires strict obedience from its citizens

the doctrine that the government should not intervene in the marketplace

property that is owned by individuals or companies, not by the government or the people as a whole

a market-based economic system in which the government is involved to some extent

a period of change in which a nation moves from one economic system to another

the process of selling businesses or services operated by the government to individual investors, and then allowing them to compete in the market place

an economic system characterized by private or corporate ownership of capital goods