Ch. 19 The American Economy
natural resources
gifts of nature that make production possible
labor
human effort directed toward producing goods and services
disposable income
income (after taxes) that is available to you for saving or spending
entrepreneur
individuals who start new businesses, introduce new products and improve management techniques
division of labor
the breaking down of a job into seperate, smaller tasks to be perforrmed individually.
productivity
the degree to which resources are being used efficiently to produce goods and services
profit motive
the force that encourages people and organizations to improve their material well-being
standard of living
the material well-being of an individual, group, or nation measured by how well their necessities and and luxuries are satisfied.
profit
the money a business receives for its products or services over and above its costs
interest
the payment people receive when they lend money or allow someone else to use their money
warranty
the promise made by a manufacturer or a seller to repair or replace a product within a certain time period if it is faulty
ethical behavior
the responsibility of consumers to respect the rights of producers and sellers
competition
the struggle that goes on between buyers and sellers to get the best products at the lowest prices.
saving
to set aside income for a period of time so that it can be used later
Gross Domestic Product (GDP)
total dollar value of all final goods and services produced in a country during a single year.
specialization
when people, businesses, regions and/or nations concentrate on goods and services that they can produce better than anyone else.
services
work performed by a person for someone else
consumerism
A movement to educate buyers about the purchases they make and to demand better and safer products from manufacturers.
consumer sovereignty
Consumer is the "king", or ruler, of the market, the one whe detemines what products will be produced.
discretionary income
Disposable income available for spending and saving after an individual has purchased the basic necessities of food, clothing, and shelter
free enterprise
Economic system in which individuals and businesses are allowed to compete for profit with a minimum of government interference
Do consumers earn their money in the product market or the factor market?
Factor market
What private and federal help can you receive as a consumer?
Federal agencies provide consumer information by passing labeling laws and the Better Business Bureau provides informaton on products and selling practices.
What is a free enterprise economy? How does consumer soveriegnty affect the free enterprise system?
Free enterprise system is an economy where competition flourishes. Consumer decisions determine what products businesses will produce.
What kinds of products are purchased with disposable income?
Necessities such as food, clothing and shelter.
What are the limits of private property rights?
People have the freedom to use their property as they choose as long as they do not interfere with the rights of others.
private property rights
The freedom to own and use our own property as we choose as long as we do not interfere with the rights of others.
product markets
a market where producers offer goods and services for sale
factor markets
a market where productive resources are bought and sold.
economic interdependence
a reliance on others, as they rely on you, to provide goods and services to be consumed
capitalism
a system in which private citizens own most, if not all of the means of production and decide how to use them within legislated limits
voluntary exchange
the act of buyers and sellers freely and willingly engaging in market transactions
capital
previously manufactured goods used to make other goods and services.
factors of production
resources necessary to produce goods and services which include natural resources, labor, capital and entrepreneurs.
goods
tangible products that we use to satisfy our wants and needs
