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An economic system based on private property and the market. It gives private property rights to individuals and relies on market forces to solve the what, how, and for whom problems
- Example: U.S. |
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| The control of a private individual or firm has has over an asset. |
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| Total Revenue - Total Costs |
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| How we coordinate the transactions |
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An economic system based on the market in which the ownership of the means of production resides with a small group of individuals called...
- Albert Carr |
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| An economic system based on individuals' good will twoard others, not on their own self-interest, and in which, in principle, society decides what, how, and for whom to produce |
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| Socialism is an economic system based on government ownership of the means of production, with economic activity governed by central planning. Socialism in practices is sometimes called: |
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| Private producing units in our society |
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| The consumer's wishes determine what's produced |
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-Businesses that have only one owner
-No distinction between business and owner
-Easiest to start |
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-Businesses with two or more owners
-Owners create unlimited liability |
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Businesses that are treated as a person, and are legally owned by their stockholders, who are not liable for the actions of the corporate "person"
-Easy to raise money
-Liability protection
-Expensive and burdensome to maintain |
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Groups of individuals living together and making joint decisions
-Most powerful economic institution |
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| Supplies labor and supplies needed to produce goods and services |
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| Factor Market (Households) |
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-Federal, State, Local
-Sets the rules of interaction between house holds and businesses, and acts as a referee, enforcing the rules and changing them when it sees fit |
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| The effect of a decision on a third party not taken into account by the decision maker |
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| When there are externalities, there is a potential role for gov't to adjust the market result through: (3) |
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1. Taxes
2. Subsides
3. Regulation |
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| A good that if supplied to one person must be supplied to all and whose consumption by one individual does not not prevent its consumption by another individual |
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| A good that, when consumed by one individual, cannot be consumed by another individual. |
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| As a result of Public Goods, people want benefits, but not the costs known as... |
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