Economics Chapter 4

The flashcards below were created by user riana143 on FreezingBlue Flashcards.

  1. the right of private persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other property
    private property
  2. the freedom of firms to 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
    freedom of enterprise
  3. 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 apporpriate
    freedom of choice
  4. that which each firm, property owner, worker and consumer believesĀ is best for itself and seeks to obtain
  5. 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
  6. the construction and use of capital to aid in the production of consumer goods
    roundabout production
  7. the use of the resources of an individual, a firm, a region, or a nation to concentrate production on one or a small number of goods and servicesd
  8. the separation of the work required to produce a product into a number of different tasks that are performed by different workers; specialization of workers
    division of labor
  9. 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
    medium of exchange
  10. the exchange of one good or service or another good or service
  11. any item that is generally acceptable to sellers in exchange for goods and services
  12. the four questions that every economy must answer; what to produce, how to produce it, how to divide the total output, and how to economic flexibility
    Four Fundamental Questions (of Economics)
  13. 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 use; equal to the quantity of other products that cannot be produced when resources are instead used to make a particular product
    economic costs
  14. 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
    normal profit
  15. the total revenue of a firm less its economic costs (which include both explicit costs and implicit costs); also called "pure profit" and "above-normal profit"
    economic profit
  16. an industry whose firms earn economic profits and for which an increase in output occurs as new firms enter the industry
    expanding industry
  17. an industry in which economic profits are negative (losses are incurred) and that will, therefore, decrease its output as firms leave it
    declining industry
  18. determination by consumers of the types ad quantities of goods and services that will be produced with the scarce resources of the economy; consumers' direction of production through their dollar votes
    consumer sovereignty
  19. the "votes" that consumers and entrepreneurs cast for the production of consumer and capital goods, respectively, when they purchase those goods in product and resource markets
    dollar votes
  20. the demand for a resource that depends on the demand for the products it helps to produce
    derived demand
  21. the ability of prices changes to bring about changes in the quantities of products and resources demanded and supplied
    guiding function of prices
  22. the hypothesis that the creation of new products and production methods simultaneously destroys the market power of existing monopolies
    creative destruction
  23. 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
    invisible hand
Card Set:
Economics Chapter 4
2013-09-14 06:08:44

vocab def to word
Show Answers: