Chapter 4: The Market System Flashcards

126393591	Intellectual Property	Patents, Copyrights, and Trademarks.
126393592	Freedom of Enterprise	Guarantees individuals the right to use economic resources to produce their own choice of goods and services.
126393593	Freedom of Choice	allows individuals and businesses to sell or give their property to whomever they choose, and for buyers to buy what they want and can afford.
126393594	Competition	Includes in independent sellers and buyers acting with Rational Self Interest, and freedom of sellers and buyers to enter and leave markets at will with no barriers.
126393595	Monopoly	Sole control over a single product or market.
126393596	Specialization	Producers will produce only those goods which the seller is most efficiently producing. For example: Ford will not sell hamburgers.
126393597	Division of Labor	Human specialization: Allows for individuals to make use of talents and abilities, takes practice, saves time, increases total output and uses resources most efficiently.
126393598	Medium of Exchange	Money: It makes trade easier.
126393599	Bartering	Trading goods for other goods. Inefficient because it requires a coincidence of wants.
126393600	Fundamental Questions	What will be produced? How will goods and services be produced? Who will get the goods and services? How will the system accommodate change?
126393601	Normal Profit	Payment for cost of entrepreneurial ability.
126393602	Economic Profit	Pure profit. Over normal profit. Money left over after paying for FOP.
126393603	Expanding Industries	Profitable industries. More sellers want to get in on the action.
126393604	Shrinking Industries	Typically sustain negative profit.
126393605	Dollar Votes	Consumers effectively "vote" for the existence of a product when they spend money on it.
126393606	Consumer Sovereignty	Consumer Dollar Vote, and so have control over the success and availability of a product.
126393607	Derived Demand	Demand for resources. Closely linked to the demand for the finished product.
126393608	Guiding Principle of Prices	High prices guide resources to the appropriate industries.
126393609	Creative Destruction	A firm that lags behind others with more efficient techniques loses competitive ground.