| A | B |
|---|
| economic system | the method used by a society to produce and distribute goods and services |
| safety net | gov't programs that protect people from experiencing unfavorable economic conditions |
| standard of living | level of economic prosperity |
| traditional economy | economic system that relies on habit, or ritual to decide questions of production and consumption of goods and services |
| market economy | economic system in which decisions on production and consumption of goods and services are based on voluntary exchange |
| command economy | an economic system in which central planners make the most of the basic economic decisions |
| centrally planned economy | economic system in which the central gov't makes the decisions on the production and consumption of goods/services |
| mixed economy | economic system that combines tradition and the free market with limited gov't involvement |
| market | an arrangement that allows buyers and sellers to exchange things |
| specialization | the concentration of the productive efforts of individuals and firms on a ltd. number of activities |
| household | a person or groups of people living in the same residence |
| firm | an organization that uses resources to produce a product which it then sells |
| factor market | a market in which firms purchase the factors of production from households |
| profit | the financial gain made in a transaction |
| product market | the market in which households purchase goods and services that firms produce |
| self-interest | one's own personal gain |
| incentive | an expectation that encourages people to behave a certain way |
| competition | the struggle among producers for the dollars of consumers |
| consumer sovereignty | decisions made by individuals about how to spend income |
| invisible hand | term economists use to describe the self-regulating nature of the marketplace |
| socialism | a social and political philosophy based on the belief that democratic means should be used to distribute wealth evenly throughout a society |
| communism | centrally planned economy; all power rests in the hands of the gov't |
| laissez-faire | gov't should NOT interfere in the marketplace |
| free enterprise | permits the conduct of business with minimal gov't intervention |
| continuum | thing whose parts cannot be separated or separately discerned |
