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23 Cards in this Set
- Front
- Back
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consumer sovereignty
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the authority of consumers to determine what is produced through their purchases of goods and services
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profit and the allocation of resources
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when good/service(it) seems to have the potential to generate a profit, entrepreneurial will put together the resources need to produce good/services
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flow or resources
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competitive firms produce in the manner that minimizes costs and maximizes profits
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Adam Smith
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"The Wealth of Nations" (1776. the invisible hand reached out and guided the resources to their most-valued use. I.H is the self-intrest that drives firms/consumers what to buy/sell
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determination of income
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your income determines your ability to pay. income is obtained by selling the services of resources. ownership of resources determines who gets what goods and services in a market system
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private sector
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households, business, and the international sector
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public sector
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the government
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household
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one or more persons who occupy a unit of housing
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consumption
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household spending. housing, transportation, food, entertainment, and other goods and services. $6.7tril in 2000
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business firm
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a business organization controlled by a single management. firm: company, enterprise, business
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sole proprietorship
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a business owned by one person, who receives all the profits and is responsible for all the debts incurred by the business
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partnership
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a business with two or more owners who share the firm's profits and losses. partnership: individuals, estates, or other business
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corporation
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legal entity owned by shareholders whose liability for the firm's losses is limited to the value of the stock they own
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multinational business
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a firm that owns and operates producing units in foriegn countries
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investment
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spending on capital goods to be used in producing goods and services
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Business Firm types
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Sole Proprietorships, partnerships, or corporations
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imports
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products that a country byrs from other countries
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exports
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products that a country sells to other countries
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trade surplus
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the ituation that esists when imports are less than exports
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trade deficit
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the situation that exists when imports exdeed exports
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net exports
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exports minus imports equal net exports
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financial intermediaries
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institutions that accept deposits from savers and make loans to borrowers
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circular flow-diagram
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a model showing the flow of output and income from one sector of the economy to another
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