Chapter 3 Review Free Enterprise Economics. 1 In a free enterprise economy, how is the following...
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Transcript of Chapter 3 Review Free Enterprise Economics. 1 In a free enterprise economy, how is the following...
Chapter 3 ReviewFree Enterprise
Economics
1In a free enterprise economy,
how is the following question answered. What goods will be produced?
Producers produce what consumer want to buy.
2How will goods be produced
in a free enterprise economy?By individuals who own and
manage businesses.
3For whom will goods be
produced in a free enterprise economy?
The consumers who are willing to buy them.
4Under the right of ______ the
government can take ownership of land without the consent of the owner.
Eminent domain
5How does competition
among producers benefit consumers?
Lower pricesBetter variety of productsProduct improvements
6List an economic incentive
the federal government offers to citizens?
Tax breaks for home ownership, student loans
7The amount of money left
over after all the costs of production have been paid.
Profit
8The amount of money by
which total costs exceeds total revenue.
Loss
9Any good that is owned by
an individual or business. Private property
10The principles of conduct,
such as right and wrong, morality, and immorality, good and bad.
Ethics
11List an argument for why free
enterprise is an ethical economic system.
People can chooseVariety of productsRewards depend on performanceFreedoms
12List a reason against the free
enterprise economic system.Income inequalityToo much power to large
corporations
13A person who has a special talent
for searching out and taking advantage of new business opportunities, as well as developing new products and new ways of doing things.
Entrepreneur
14An agreement between two
or more people to do something.
Contract
15A public good that individuals
can be physically prohibited from consuming.
Excludable public good
16Give an example of a
nonexcludable public good.National defense
17A person who receives the
benefits of a good without paying for it.
Free rider
18An adverse side effect of an
act that is felt by others.Negative externality.
19Any good that is owned by
the government.Public property
20Give an example of a
negative externality. Neighbors who fail to maintain
their propertyLoud music Pollution
21A beneficial side effect of an
action that is felt by others. Positive externality.
22The price of a good times the
number of units of the good sold equals________.
Total revenue
23Give an example of an
excludable public good. Lecture at a college – if you
aren’t accepted or don’t pay tuition
24A(n) _______ is something
that encourages or motivates a person toward an action.
Incentive
25A public good that individuals
cannot be physical prohibited from consuming.
nonexcludable public good
Final Question
List 5 important features of free enterprise.
Private propertyChoiceVoluntary exchangeCompetitionEconomic incentives