chapter 3 the American free enterprise system test
medicare
federal health insurance program for senior citizens, regardless of income
Social Security
federal program of disability and retirement benefits that covers most working people
private property rights
fundamental feature of capitalism, which allows individuals to own and control their possessions as they wish; includes both tangible and intangible property
how do private property right serve as an incentive in a free enterprise economy?
gives people the right to control their possessions and use them as they wish.
what is the role of the consumer in the free market economy?
in this economy, people and business carry on economic affairs freely, but they are subject to some government intervention and regulation.
fixed income
income that doesn't increase over time
explain what inflation is.
inflation- a rise in the general level of prices, occurs, workers need income money to put for food and shelter.
minium wage
lowest legal wage that can be paid to most workers
Inflation
rise in the general level of prices
Entrepreneur
risk-taking individuals in search of profits; one of four factors of production.
consumer sovereignty
role of consumer as ruler of the market when determining the types of goods and services produced
voluntary exchange
the act of buyers and sellers freely and willingly engaging in market transactions
profit motive
the driving force that encourages individuals and organizations to improve their material well-being
what role does the government play in a free enterprise system?
the government makes sure that producers provide consumers with information, imposes various restrictions, and protects consumers.
competition
the struggle among sellers to attract consumers
how does the free enterprise system allow for the ability to more easily adapt to changing economic conditions.
by using economic freedom, voluntary exchange, private property rights, profit, profit motive, competition.
how are conflicts among economic goals resolved?
by voting for elected officials.
what is a consumer?
consumer economics is a branch of economics. it is a broad filed, principally concerned with microeconomics analysis behavior unit of consumers.
explain how consumer sovereignty operates in the marketplace to determine the success or failure of an entrepreneur.
consumer sovereignty recognizes the role of the consumer as sovereign, or ruler, of the market. the phrase " the consumer is always right reflects this power.
what role do consumers play in a free enterprise system?
consumers play the crucial role of "judge" by purchasing the products and services that best meet their needs. in this way consumers determine which products are sold and which business succeed.
list the four roles of the government in economics.
Protector, Provider, Regulator, Consumer
free enterprise
an economic system in which private business operates in competition and largely free of state control.
profit
difference between the revenue from sales and the full opportunity cost of resources involved in producing the sales
list the seven economic goals.
economic freedom, efficiency economic stability, economic security, full employment, price stability, economic growth.
mixed economy
economic system that has some combination of traditional, command, and market economies