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13 Cards in this Set

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