The United States Economic System
External Cost
A cost of business paid for by society as a whole
Internal Cost
A cost of business paid for by the business firm
Private Property
Allowing individuals to own property and use it in any lawful manner they choose
Capitalism
An economic system in which the means of production are privately owned
Wealth of Nations
Book that Adam Smith wrote
Supply
Goods and services available after purchase
Laissez Faire
Government should not interfere in the economy
Freedom of enterprise
Individuals can own business and run them as they see profit
Public Unity
Industries that serve the public interest like the electric company
Adam Smith
Scottish economist who wrote the Wealth of Nations a precursor to modern Capitalism.
Profit Motive
The willingness of entrepeuners to risk financial loss by organizing and launching enterprise would be willing to open a business even though they loose money cause they want to make money
Circular Flow
Stream of funds, goods and services passing back and forth among households
Profits
The amount of money left over after subtracting business expenses from business income
Gross Domestic Product
The dollar value of all goods and services produced by an economy in a single year
Consumer Sovereignty
The freedom to choose which goods one can buy
Eminent Domain
The power of the government to seize property if it intends to use it for some public purpose
Competition
The rivalry among buyers and among sellers in the same field
Demand
Want of goods and services
Specialization
Workers perform one specialized task and depend on other workers to provide them with the things they need
