economic system
is the way a society uses its scare resources to satisfy its people's unlimited wants
traditional economy
is an economic system in which families, clans or tribes make economic decisions based on customs and beliefs
command economy
an economic system in which the government makes decisions about what is produced, how, and for whom
basic economic questions
what, how and for whom to produce
market economy
in this economic system, consumers and producers drive the economy.
socialism
an economic system in which the government owns some or all of the factors of production
communism
a more extreme form of socialism, no private ownership, little political freedom
private property rights
the rights of individuals and groups to own property
market
any place in which people buy and sell resources and goods and services.
laissez faire
the principle that government should not interfere in the economy
capitalism
an economic system that is based on private ownership; operates on the belief that producers will create goods that consumers demand
profit
financial gain from a business transaction
competition
the effort of two or more people to get the business of others by offering the best deal.
consumer sovereignty
consumer are free to purchased what they want and refuse to buy what they don't want. They have ultimate control over what is produced.
specialization
allows people and business to concentrate on the areas in which they have an advantage
product market
The exchange of money for products-the exchange occurs between business and consumers
factor market
when individuals sell land, labor and capital to businesses in exchange for income