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Economics
Study Cards
Term | Definition |
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Economic System | The structure of methods and principle that a society uses to produce and distribute goods and services. |
Factor Payment | The income people receive in return for supplying factors of production. |
Profit | The amount of money a business receives in excess of its expenses. |
Safety Net | A set of government programs that protect people who face unfavorable economic condition. |
Standard of Living | Level of economic prosperity. |
Innovation | The process of bringing new methods, products, or ideas into use. |
Traditional Economy | An economic system that relies on habit, custom, or ritual to decide the three economic questions. |
Market | Any arrangement that allows buyers and sellers to exchange things. |
Specialization | The concentration of the productive efforts of individuals and businesses on a limited number of activities. |
Free Market Economy | An economic system in which decisions on the three key economic questions are based on voluntary exchange in markets. |
Households | A person or group of people living in a single residence. |
Firm | An organization that uses resources to produce a product or service, which it then sells. |
Factor Market | The arena of exchange in which firms purchase the factors of production from households. |
Product Market | The arena of exchange in which households purchase goods and services from firms. |
Self-Interest | An individual's own personal gain. |
Incentive | The hope of reward or fear of penalty that encourages a person to behave in a certain way |