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| the right of private persons and firms to obtain, own, control, employ, dispose of, and bequeath LAND, CAPITAL, and OTHER PROPERTY. |
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| the freedom of FIRMS t obtain economic resources, to use those resources to produce products of the firm's own choosing, and to sell their products in markets of their choice |
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| the freedom of owners of property resources to employ or dispose of them as they see fit, of workers to enter any line of work for which they are qualified, and of consumers to spend their incomes in a manner that they think is appropriate |
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| that which each firm, property owner, worker, and consumer believes is the best for itself and seeks to obtain |
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| the presence in a market of independent buyers and sellers competing with one another and the freedom of buyers and sellers to enter and leave the market |
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| the construction and use of CAPITAL to aid in the production of CONSUMER GOODS |
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Term
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| the use of resources of an individual, a firm, a region, or a nation to concentrate production on one or a small number of goods and sevices |
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| the separation of the work required to produce a product into a number of different tasks that are performed by different works; SPECIALIZATION of workers |
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| any item sellers generally accept and buyers generally use to pay for a good or service; MONEY; a convenient means of exchanging goods and services without engaging in BARTER |
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| any item that is generally acceptable to sellers in exchange for goods and services |
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Term
| Four Fundamental Questions |
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Definition
the four questions that every economy must answer:
1) What to produce?
2) How to produce it?
3) How to divide the total output?
4) How to ensure economic flexibility? |
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Term
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Definition
| a payment that must be made to obtain and retain the services of a RESOURCE; the income a firm must provide to a resource supplier to attract the resource away from an alternative us; equal to the quantity of other products that cannot be produced when resources are instead used to make a particular product |
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Term
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| the payment made by a firm to obtain and retain ENTREPRENEURIAL ABILITY; the minimum income entrepreneurial ability must receive to induce it to perform entrepreneurial functions for a firm |
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| the TOTAL REVENUE of a firm less its ECONOMIC COSTS (which include both EXPLICIT and IMPLICIT COSTS); also called "pure profit" and "above normal profit" |
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Term
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| an industry whose firms earn ECONOMIC PROFITS and for which an increase in output occurs as new firms enter the industry |
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| an industry in which expansion through the entry of firms lowers the prices that firms in the industry must pay for resources and therefore decreases their production costs |
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Term
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| determination by consumers if the types and quantities of goods and services that will be produced with the scarce resources of the economy; consumers' direction of production through their dollar votes |
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| the "votes" that consumers and entrepreneur cast for the production of consumer and capital goods, respectively when they purchase those goods in product and resource markets |
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| the demand for a resource that depends on the demand for the products it helps to produce |
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| Guiding Function of Prices |
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Definition
| the ability of price changes to bring about changes in the quantities of products and resources demanded and supplied |
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Definition
| the hypothesis that the creation of new products and production methods simultaneously destroys the marker power over existing monopolies |
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| the tendency 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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