Questions and Answers
What is a factor payment?
What does patriotism refer to?
A sense of pride in one's country
What is a safety net?
Government programs that protect people experiencing unfavorable economic conditions
Define standard of living.
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What is a traditional economy?
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What defines a market economy?
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What is a centrally planned economy?
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What characterizes a command economy?
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What is a mixed economy?
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Define market.
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What does specialization mean?
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What is a household in economic terms?
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What does profit refer to?
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Define product market.
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What does self-interest mean?
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What is an incentive?
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Define competition in economic terms.
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What does the term 'invisible hand' refer to?
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What is consumer sovereignty?
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Define socialism.
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What is communism?
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What does authoritarian refer to?
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What is a collective?
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Define heavy industry.
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What does efficiency mean in economics?
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What is the law of increasing costs?
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What is a trade-off?
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Define opportunity cost.
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What does thinking at the margin mean?
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Study Notes
Factor Payments
- Factor payments refer to the income received by individuals or entities in exchange for providing factors of production, such as labor, land, and capital.
Patriotism
- Patriotism embodies a strong sense of pride in one’s nation, fostering unity and loyalty among citizens.
Safety Net
- Safety net programs are designed to assist individuals facing economic hardships, providing financial support during tough times.
Standard of Living
- Standard of living indicates the level of economic prosperity experienced by individuals or groups, often measured by income, education, and access to resources.
Traditional Economy
- In a traditional economy, production relies on established customs and practices, with roles typically passed down through generations.
Market Economy
- Decisions in a market economy are predominantly made by individuals or through open market transactions, encouraging personal initiative and competition.
Centrally Planned Economy
- A centrally planned economy is characterized by government control over the allocation of resources and production decisions.
Command Economy
- Much like a centrally planned economy, a command economy also involves government directives in the management of economic resources.
Mixed Economy
- A mixed economy combines elements of private enterprise with government intervention, aligning benefits from both systems for a balanced approach.
Market
- A market represents a collective space where buyers and sellers engage in the exchange of goods and services.
Specialization
- Specialization involves training or developing expertise in a specific area of work, enhancing efficiency and productivity.
Household
- A household consists of individuals or groups residing together, influencing economic consumption and resource allocation.
Firm Factor Market
- The firm factor market is the arena in which firms seek to purchase or hire factors of production, such as labor and capital.
Profit
- Profit is defined as the financial gain resulting from a transaction, calculated by subtracting costs from revenues.
Product Market
- The product market is the setting where households buy goods and services produced by firms.
Self-interest
- Self-interest motivates individuals to act in ways that seek personal gain, influencing economic decisions.
Incentive
- Incentives are stimuli that encourage certain behaviors—these can be positive (rewards) or negative (penalties).
Competition
- Competition illustrates the struggle for resources among entities, fostering innovation and driving quality within a marketplace.
Invisible Hand
- The invisible hand metaphor describes how self-regulating market forces guide resources towards their most efficient uses, driven by individual self-interests.
Consumer Sovereignty
- Consumer sovereignty emphasizes the power held by consumers in determining product availability through their purchasing choices.
Socialism
- Socialism involves governmental ownership and control over significant business sectors, aiming to distribute resources more equitably.
Communism
- Communism describes a socio-economic system where property is collectively owned, eliminating individual ownership and prioritizing community welfare.
Authoritarian
- Authoritarian systems centralize power, often limiting individual freedoms and promoting state control over social and economic structures.
Collective
- A collective farm is a large agricultural unit operated by groups of farmers under lease from the government, aiming for efficiency through collaboration.
Heavy Industry
- Heavy industry necessitates substantial capital investment and primarily produces goods utilized in other industries, such as machinery.
Underutilization
- Underutilization occurs when resources are not fully exploited, leading to inefficiencies and lost potential output.
Efficiency
- Efficiency is the measure of how effectively input resources are converted into productive output, often expressed as a percentage.
Law of Increasing Costs
- This law states that reallocating resources from one good to another typically results in higher production costs for the second good due to differing factor inputs.
Trade-off
- A trade-off represents the alternative sacrificed when a particular choice is made, highlighting opportunity costs in decision-making.
Opportunity Cost
- Opportunity cost is the most valuable alternative forgone when making a decision, guiding economic choices and resource allocation.
Thinking at the Margin
- Thinking at the margin refers to the process of evaluating the benefit or cost of producing or using one additional unit of a resource.
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Description
Test your knowledge on key economic concepts with these flashcards focusing on factor payments and related terms. Each card provides definitions to help you understand the principles of factor income, patriotism, safety nets, standard of living, and traditions. Perfect for students of economics or anyone looking to deepen their financial literacy.