| A | B |
|---|
| Proprietorship | A form of business organization with one owner, who takes all the risks and profits |
| Corporation | Business ownership authorized by law to act as one body - Owners share profits. Liability is limited to investment. |
| Opportunity cost | What is given up when a choice is made |
| U.S. Economic Characteristics | Free Markets, Private Property, Competiition, Consumer Sovereignty |
| Free Markets | Operate without undue interference from the government |
| Private Property | Individuals & businesses have the right to own property & the means of production without undue interence. |
| Competition | Rivalry between producers, & between sellers results in better quality & lower prices for consumers. |
| Consumer Sovereignty | Through purchases, consumers determine what goods & services will be produced. |
| Economic Systems | The type of economy a nation has, reflects how people, government & business interact. The U.S. economic system reflects our commitment to personal freedom. |
| Private Financial Institutions | Include banks, savings & loans, credit unions, & securities brokerages - Get deposits, make loans - Pay interest on deposits. |
| Command Economy | Central ownership of property & resources, centrally-planned economy, low consumer choice |
| Global Economy | Interactions of worldwide markets & producers. |
| Entrepreneur | One who takes risks in establishing a business to produce goods & services, in order to seek a profit. |
| Partnership | Two or more business owners who share the risks & the profits. |
| Basic types of Business Ownership | Proprietorship, Partnership, & Corporation |
| Scarcity | Limitation of resources & goods Scarcity and equires choices. |
| Reasons why states & nations trade | To obtain goods & services they can't produce efficiently themselves. 2. To buy goods & services at a lower cost.3. To sell goods & services to a wider market. 4. To create jobs. |
| Mixed Economy | Individuals & business are decision-makers for the private sector: government is the decision-maker for public sector, government controls. This is the most common economic system today. |
| Free Market | Private ownership of property & resources - market determines production, high choice, competition, & chance for profit. |
| Economic Flow | The interrelationship of individuals, businesses, & governments in a market economy. Individuals & businesses save, invest & provide capital that can be used for business expansion & consumption. Individuals own & sell resources, & sue the income to purchase product. Businesses buy resources & make products to sell to individuals, other businesses, & the government, & use profits to buy more resources. Governments use tax revenue to provide public goods & services. |
| Production | Combining human, natural, capital, & entrepreneurship resources to make goods or provide services. |
| Incentives | Those things that incite or motivate - Incentives are used to change economic behavior. |
| Resources | Factors of production for goods & services - These include natural resources, human resources, capital, & entrepreneurship. |
| Consumption | Use of goods & services - Consumer preferences & price determine consumption - what is purchased. |
| Supply and Demand | Determines price - Demand is the amount that consumers are willing and able to buy at a certain price. Supply is the amount that producers are willing and able to sell at a certain price. |
| Price | The amount of money exchanged for a good or service. Price is determined by the interaction of supply and demand. |
| Profit | The income that remains after a business has paid its expenses, taxes, and other costs. |
| Capitalism | An economic system in which individuals put their money into a business in hopes of making a profit. |
| Federal Communications Commission (FCC) | Regulates radio and television |
| Federal Trade Commission (FTC) | Prevents monopolies and unfair business practices |
| Environmental Protection Agency (EPA) | Protects the environment by enforcing pollution control laws and regulations |
| Sole Proprietorship | A business that one person owns. |
| Public Goods/Services | Those things provided by the government to benefit many, including highways, postal service, national defense. Paid for by tax revenue and borrowed funds. |
| 16th Amendment (1913) | Congress has the power to collect this. |
| Federal Reserve | Twelve banks set up to sserve as a bank of reserve and discount for affiliated banks in its district. |
| Anti-trust | Legislation or oposition to trusts or combinations. Laws to protect trade & commerce from unlawful restraints. |
| Monopoly | Exclusive ownership through exclusive possession. |
