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