Free Enterprise Ch. 2

the way in which a society decides what goods to produce, how to produce them, and for whom goods will be produced

economic system

an economic system in which individuals (not government) own most if not all the resources and control their use. government plays only a small part in the economy

free enterprise

an economic system in which government controls and may own many of the resources

socialism

a government program specifying economic activities, such as what goods are to be produced and what prices will be charged

economic plan

the way all the income earned in a country is divided among different groups of income earners

income distribution

an economy that is neither purely capitalist not purely socialist; an economy that has some elements of both capitalism and socialism. most countries in the world have these

mixed economies

an economic system in which the answers to the 3 economic questions are based on customs, traditions, and cultural beliefs

traditional economy

a sense of how the world works

vision

the belief that all value in produced goods is derived from labor

labor theory of value

the difference between the total value of production and the subsistence wages paid to workers

surplus value

a phenomenon by which economic agents in any given part of the world are affected by events elsewhere in teh world; the growing integration of the national economies of the world to the degree that we may be witnessing the emergence and operation of a single world-wide economy

globalization

the term used to describe work done for a company by persons other than the original company's employees in a country other than the one in which the company is located

offshoring