Economics C3: American Free Enterprise

Front 1

What is a Profit Motive?

Back 1

The force that encourages people and organizations to improve their material well- being

Hint 1

The heart of the American free-enterprise system. Operating in ways that will maximize profits.

Front 2

What is Open Opportunity?

Back 2

The concept that everyone can compete in the marketplace.

Hint 2

Different people & companies will have different outcomes, depending on their success in the marketplace.

Front 3

What is Legal Equity?

Back 3

The concept of giving everyone the same legal rights.

Hint 3

This allows everyone to compete in the economic marketplace & promotes economic mobility up/down.

Front 4

What is a Free Contract?

Back 4

The concept that people have the right and privilege to control their possessions as they wish.

Hint 4

Allows people to decide what agreements they want to enter into.

Front 5

What is Voluntary Exchange?

Back 5

The concept that people may decide what and when they want to buy and sell.

Hint 5

Prevents people being forced into buying or selling at any particular time or at specific prices.

Front 6

What is Competition?

Back 6

The rivalry among sellers to attract customers while lowering costs.

Hint 6

Provides consumers with the choiceof a larger variety of good, most of which are sold at reasonable prices.

Front 7

What is an Interest Group?

Back 7

A private organization that tries to persuade public officials to act or vote according to group members interests.

Hint 7

Most form around some economic issue like taxation, farm aid, or land use.

Front 8

What is a Public Disclosure Law?

Back 8

A law requiring companies to provide full information about their products.

Hint 8

Government information used by consumers to protect themselves from dangerous products or fraudulent claims.

Front 9

What is Public Interest?

Back 9

The concerns of the public as a whole.

Hint 9

This Gov. intervention for consumer protection led to manufacturing standards, safer, more effective drugs & food delivery sanitation

Front 10

What is Macroeconomics?

Back 10

The study of the behavior and decision making of entire economies.

Hint 10

Examines major trends for the economy as a whole. Macro means "large" in the study of economic concepts

Front 11

What is Microeconomics?

Back 11

The study of the economic behavior and decision-making of small units, such as individuals, families, households, and businesses.

Hint 11

Micro means "small" in the study of economic concepts

Front 12

What is the Gross Domestic Product? (GDP)

Back 12

The total value of all final goods & services produced within a particular economy.

Hint 12

Economists follow this statistic of a country's economic growth to predict business cycles.

Front 13

What is a Business Cycle?

Back 13

A period of Macroeconomic expansion followed by a period of contraction/decline.

Hint 13

These may last less than a year or many years before changing. The Gov. tries to prevent major swings in the economy by setting various interest rates or printing more currency.

Front 14

What is the Public Good?

Back 14

A shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers

Hint 14

Taxes are collected by the federal government to fund projects in the public interest ( ie., dams, national parks, space program, et. al.

Front 15

What is the Public Sector?

Back 15

The part of the economy that involves the transactions of the government.

Hint 15

Criteria include: (1) the benefit to each individual is less than the cost each would have to pay if it were provided privately; &
(2) the total benefits to society are greater than the total cost.

Front 16

What is the Private Sector?

Back 16

The part of the economy that involves the transactions of individuals and businesses.

Hint 16

Has little incentive to produce public goods as there would be little/no profit from it. Ex. funding public education

Front 17

What is a Free Rider?

Back 17

Someone who would not choose to pay for a certain good/service, but who would get the benefits of it anyway, if it were provided as a public good.

Hint 17

Ex. You probably would not contribut $3,500 to buy soldiers helmets (your portion of the U.S. military cost this year), even though this defense protects you whether you pay or not.

Front 18

What is Externality?

Back 18

An economic side effect of a good/service that generates benefits or costs to someone other than the person deciding how much to produce or consume.

Hint 18

May be positive ( public goods generate benefits to many people including "free riders" or Negative (unintended costs to someone other than the producer of the good/service).

Front 19

What is a Poverty Threshold?

Back 19

An income level below that which is needed to support families or households.

Hint 19

A relative figure determined by the Federal Gov. and adjusted periodically for inflation rates. Ex. A single parent age 65 with one child = $12,120 in 2002.

Front 20

What is Welfare?

Back 20

Government aid to the poor.

Hint 20

Critics of this program argue that people are becoming dependent on these $$$ & are unable/unwilling to get off it through employment in the work force.

Front 21

What are Cash Transfers?

Back 21

Direct payments of money to eligible poor people.

Hint 21

Programs include: Temporary Assistance for Needy Families, Social Security, & Workman's Compensation

Front 22

What are In-Kind Benefits?

Back 22

Goods and services provided for free or at greatly reduced prices.

Hint 22

Include food giveaways, food stamps, subsidized housing, and legal aid.

Front 23

What is Market Failure?

Back 23

A situation in which the market does not distribute resources efficiently.

Hint 23

A scenario where the criteria for properly functioning market system does not exist. (ex. road construction by private industry would not be profitable)

Front 24

What is the Work Ethic?

Back 24

A commitment to the value of work and purposeful activity.

Hint 24

Americans have lost some of this value due to government assistance programs & higher standards of living

Front 25

What is Technology?

Back 25

The process used to produce a good or service.

Hint 25

Improvements in this area allow an economy to produce more output from the same or a smaller quantity of inputs, or resources.

Front 26

What are Private Property Rights?

Back 26

The concept that people have the right & privilege to control their possessions as they wish.

Hint 26

Allows people to make decisions about their own property. (ex. Prohibiting hunting rights on your land)