Vocabulary
1. Factor payment: The income people receive for supplying factors of production,such as land, labor, or capital.

2. Patriotism: The love of ones country; the passion that inspires a person to serve his or her country.

3. Safety net: Government programs that protect people experiencing unfavorable economic conditions.

4. Standard of living: Level of economic prosperity.

5. Traditional economy: Economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services.

6. Market economy: Economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets.

7. Centrally planned economy: Economic system in which the central government makes all decisions on the production and consumption of goods and services.

8. Command economy: Economic system which a central authority is in command of the economy; a centrally planned economy.

9. Mixed economy: Market based economy system with limited government involvement.

10. Market: An arrangement that allows buyers and sellers to exchange things.

11. Specialization: The concentration of the productive efforts of individuals and firms on a limited number of activities.

12. Household: A person or group of people living in the same residence.

13. Firm: An organization that uses resources to produce a product, which it then sells.

14. Factor market: Market in which firms purchase the factors of production from households.

15. Profit: The financial gain made in a transaction.

16. Product market: The market in which households purchase the goods and services that firms produce.

17. Self-interest: One’s own personal gain.

18. Incentive: an expectation that encourages people to behave in a certain way.

19. Competition: The struggle among produces for the dollars of consumers.

20. Invisible hand: Term economists use to describe the self-regulating nature of the marketplace.

21. Consumer sovereignty: The power of consumers to decide what gets produced.

22. Socialism: A social and political philosophy based on the belief that democratic means should be used to