Chapter 3 - Economics

The three basic principals of Free Enterprise are...

• Profit Motive, Open Opportunity & Economic Rights

• Profit Motive, Closed Opportunity & Legal Equality

• Free Contract, Voluntary Exchange & Competition

• Communism, Free market & Socialism

The concept that people have the right and privilege to control their possessions as they wish

• Free Contract

• Private Property rights

• Competition

• Legal equality

Nike and Adidas both fight to attract customers while lowering their costs to complete this. What is this an example of?

• Profit Motive

• Open Opportunity

• Competition

• Economic Rights

The study of the behavior and decision making of ENTIRE economies is

• Macroeconomics

• Microeconomics

• Big economics

• small economics

The study of the economic behavior and decision making of small units, such as individuals, families and businesses

• Big economics

• Microeconomics

• Macroeconomics

• Small Economics

This is the idea that we see in the United States where everyone has the chance to compete in the market place. No matter how much money you start with, you can end up wealthier or poorer depending on how well your business performs.

• Open Opportunity

• Legal Equality

• Free Contract

• Voluntary Exchange

An Economics side affect of a good or service that generates benefits or cots to someone other than the person deciding how much to produce or consumer

• Externality

• Competition

• public good

• GDP

An example of a positive externality

• A mill dumps chemical wastes into the nearby river and it costs the city a lot to clean it up

• Your neighbor has hip hop night and they play music all night but you hate hip hop.

• A person smokes cigarettes all of their life but someone in their family develops a disease from second hand smoke (they didn't smoke)

• A person buys an old house in a neighbor and fixes it up nicely. Her neighbors are not involved in her decisions but they benefit positively due to increased property values and better views

An example of a negative externality

• Making students at a high school take CPR

• Saving endangered species from extinction

• Driving a car and polluting the air

Someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway if it were provided as a public good

• Externality

• Free Loader

• Free Rider

• Voluntary Exchange