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13 Cards in this Set
- Front
- Back
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The Market System depends on what 3 possesseions?
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Private Ownership of Property
Freedom of Entreprise Freedom of Choice |
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Property rights include what 3 things?
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Investment and Maintenance
Exchange Long-Term Protections (patents, copyrights) |
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Freedom of enterprise?
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Entrepreneurs and private businesses are free to obtain and use economic resources to produce and sell G+S.
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Freedom of choice?
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Owners may employ or dispose of their property or money as they see fit.
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3 primary characteristics of the market system?
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Pursuit of Self-Interest
Competition among independently acting sellers/buyers Markets and Prices |
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3 common features of market systems (AKA DRIVING FORCES OF ECONOMY, not characteristics)
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Specialization
Use of advanced technology Extensive use of capital goods |
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Four Fundamental Questions?
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What G+S will be produced?
How will they be produced? Who will buy them? How will the system used accomadate for changes in consumer tastes, resource supplies, and technology? |
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Equation for Economic Profit?
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Total Revenue - Total Cost
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Normal Proft?
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Cost of entrepreneaur's contributions
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Expanding Industry?
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Industry whose firms earn economic profits and for which an increase in output occurs as new firms enter the industry
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Declining Industry?
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An industry in which economic profits are negative (losses) and will decrease in output as new firms enter the industry
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Who introduced the "invisible hand" and how?
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Adam Smith in The Wealth of Nations
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"invisible hand"?
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The tendancy of firms and resource suppliers that seek to further their own self-interests in competitive markets to also promote the interest of society.
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