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| the right of private persons & firms to obtain, own, control, employ, dispose of, & bequeath land, capital, & other property. |
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| the freedom of firms to obtain economic resources, to use those resources to produce products of the firm's own choosing, & 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, & 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, & consumer believes is best for itself & seeks to obtain. |
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| the presence in a market of independent buyers & sellers competing with one another & the freedom of buyers & sellers to enter & leave the market. |
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| the construction & use of captial to aid in the production of consumer goods. |
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| the use of the resources of an individual a firm, a region, or a nation to concentrate production on one or a small # of goods & services. |
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| the sepration of the work required to produce into a # of different tasks that are performed by different workers; specialization of workers. |
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| any item sellers generally accept & buyers generally use to pay for a good or service; money; a convenient means of exchanging goods & services with out engaging in barter. |
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| the exhange of one good or service for another good or service. |
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| any item that is generally acceptable to sellers in exchange for goods & services. |
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| Four Fundamental Questions (of economics) |
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Definition
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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Definition
| a payment that must be made to obtain & retain the services of a resource, the income a firm must provide to a resource supplier to attract the resource away from an alternative use; 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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| the payment made by a firm to obtain & retian entrepreneurial ability; the minimum income entrepreneurial ability must recieve 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 costs & implicit costs); also called "pure profit" and "above-normal profit." |
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| An industry whose firms earn economic profits & for which an increase in output occurs as new firms enter the industry. |
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| An industry in which economic profits are negative (losses are incurred) and that will, therefore, decrease its output as firms leave it. |
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| Determination by consumers of the types & quantities of goods & 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 entrepreneurs cast for the production of consumer and capital goods, respectively, when they produce 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 rescources demanded and supplied. |
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| The hypothesis that the creation of new products and production methods simultaneously destroys the market power of 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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