Chapter 19 Vocabulary: The American Economy
factors of production
(natural resources) Land, Labor, Entrepreneurship, Capital
division of labor
Division of work into a number of separate tasks to be performed by different workers
labor
Human effort directed toward producing goods and services
factor market
Market where productive resources are bought and sold
goods
Physical objects such as clothes or shoes
natural resources
Raw materials supplied by nature that come from the earth, the water, or the air and are used to produce goods.
Gross Domestic Product (GDP)
The sum total of the value of all the goods and services produced in a nation
sector
a group within our economy who share the same economic aim and fulfil the same economic function
product market
a market where producers offer goods and services for sale
economic interdependence
a reliance on others, as they rely on you, to provide goods and services to be consumed
free enterprise
an economy that relies chiefly on market forces to allocate goods and resources and to determine prices
specialization
people, businesses, regions and countries concentrate on goods or services that they can produce better than anyone else
capital
previously manufactured goods used to produce other goods and services
standard of living
quantity and quality of goods and services available to an individual or society
voluntary exchange
the act of buyers and sellers freely and willingly engaging in market transactions
private property rights
the concept that people have the right and privilege to control their possessions as they wish
profit motive
the driving force that encourages individuals and organizations to improve their material well-being
market
the free and willing exchange of goods and services between buyers and sellers
consumer sovreignty
the power of consumers to decide what gets produced
competition
the struggle between buyers and sellers to get the bst products at the lowest prices
input
A good or service that is used to produce another good or service.
productivity
A performance measure that includes effectiveness and efficiency
consumer
A person who purchases goods and services for personal use
entrepreneur
A person who starts up and takes on the risk of a business
services
Actions or activities that one person performs for another.
profit
Amount of money a business earns above and beyond what it spends for salaries and other expenses
capitalism
An economic system based on private property and free enterprise.
laissez-faire economics
Hands off approach to government; the government should not interfere in the economy-created by Adam Smith in The Wealth of Nations