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Terms in this set (15)
free enterprise system
another name for capitalism. an economic system based
open opportunity
the ability of everyone to take part in the market by free choice
legal equality
a situation in which everyone has the same economic rights under the law
free contract
a situation in which people decide which legal agreements to enter into
it drives people to seek financial gains
what is the role of the profit motive in the american free enterprise system?
modified free enterprise economy
a free enterprise economic system with some gov involvement
the government collected taxes for goods and services
why is the us economy sometimes referred to as a modified free enterprise economy?
producers enter markets that offer higher profits
how does the profit motive work to allocate resources?
market failure
occurs when people who are not a part of a marketplace interaction benefit from it or pay part of its costs
infrastructure
all the goods and services necessary for the functioning of society
externality
a side effect of a product that affects someone other than the producer or the buyer
subsidy
a government payment that helps cover the costs of an economic activity that has the potential to benefit the public as a whole
it is essential to the functioning of a modern economy
how is infrastructure linked to the economy?
open opportunity, legal equality, and free contract
what are some of the rights that must be protected for a free enterprise system to work?
consumers dictate how much producers make
what are the roles of consumers and producers in allocating resources?