Economy Chapter #2 Section 2

An arrangement that allows buyers and sellers to exchange things is a(n)...

Market

Markets exist primarily because...

No one is Self-Sufficient.

An individual's own personal gain is..

Self-Interest

Free market economiex are able to attain economic growth because...

Compeition encourages innovation.

According to Adam Smith, what "Invisible hand" regulates the free market economy?

Competition and self-interest.

The fact that consumers have the power to decide what gets produced is called...

Consumer Sovereignty

The arena of exchange where firms purchase factors of production is called the...

Factor Market

In a free market economy, who owns the factors of production?

Households.

The hope of reward that encourages a person to behave in a certain way is a(n)...

Incentive

The concentration of the productive efforts of businesses and individuals on a finite number of activities is called...

Specialization