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20 Cards in this Set
- Front
- Back
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Thomas Sowell
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Outstanding economist; stressed the role of knowledge in economy
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Transaction Costs
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Time, effort and other resources needed to search out, negotiate and complete an exchange
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Property Rights
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Rights to use, control, and obtain benefits from a good or resource
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Private Property Rights
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Exclusively held by owner and protected against invasion by other; private property can be transferred, sold or mortgaged at owners' discretion
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Private Ownership
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Provides people with strong incentive to take care of things and develop resource
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Production Possibilities Curve
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Curve outlining all possible combinations of total output that could be produced, assuming a fixed amount of production resource, technical knowledge and full and efficient use of resources; slope indicates the amount of product to be given up to produce other
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Investment
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(Capital Formation) Purchase, construction or development of resources; expands an economy's resources
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Technology
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Technical knowledge available in economy at any given time; determines amount of output
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Invention
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Creation of new product or process, facilitated by knowledge of engineering and science
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Innovation
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Successful intro and adoption of new product or process/economic application of inventions and marketing techniques
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Entrepreneur
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Person who introduces new products or improved technologies and decides on projects actions should increase value of resources and expand size of economic pie
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Creative Destruction
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Replacement of old products and production methods by innovative ones that consumer judges as superior
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Gains from trade
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Make possible, generation of more output through specialization and division of labor
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Division of Labor
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A method that breaks down the production of a product into series of specific tasks
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Law of Comparative Advantage
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Principle stating individuals, firms, regions, or nations can gain by specializing in the production of goods that they produce cheaply and exchange for expensive goods
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Human Ingenuity
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Economic goods are result of human ingenuity and action, size of economic pie varies
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Market Organization
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Method, Private parties make own plans and decisions with guidance of unregulated market prices
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Capitalism
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An economic system in which productive resources are owned privatly and goods and resources are allocated through market prices
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Collective Decision-Making
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Method of organization that relies on public sector decision making to resolve basic economic questions
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Socialism
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System of economic organization in which the ownership and control of basic means of production rest with the state and resource allocation is determined by centralized planning rather than market forces
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