chapter+3

3.1 1-5
 * 1) a) profit motive is the force that encourages people and organizations to improve their material well being. b) voluntary exchange, the concept that people may decide what and when they want to buy and sell. c) private property rights is the concept that people have the right and privilege to control their possessions as they wish. d) competition is the rivalry among sellers to attract customers while lowering costs.
 * 2) Guarantees under the american free enterprise system are private property rights, profit motive, open opportunity and competition.
 * 3) Three benefits of the free enterprise system are legal equality, open opportunity, and voluntary exchange.
 * 4) With a greater government role in the economy the amount of spending can be controlled and our money can be put to better use.
 * 5) Decisions you make as a consumer effect the economy by controlling what is bought most and where money is put.

3.2 1-6
 * 1) Macroeconomics are the study of behavior and decision making of entire economies where microeconomics are the study of the economic behavior and decision making of small units such as individuals, families, and businesses.
 * 2) Gross domestic product provides a means to analyze economic growth by looking at the total value of all final goods and services produced in a particular economy.
 * 3) The GDP lets economists predict business cycles.
 * 4) Thomas Edisons invention of the light bulb let the work day be longer and was able to bump up production.
 * 5) a) Patents and copyrights promote innovation by forcing others to invent and make their own products rather than coping someone else's. b) Innovation helps the economy because it is always bringing more money into it and opening up new ways of spending.
 * 6) Economic stability is measured by the health of a nations financial institutions.

3.3 Notes questions 1-6
 * public good- a shared good or service for which it would be impractical to make consumers pay for individually and exclude nonpayers.
 * public sector- the part of the economy that involves the transactions of the government.
 * private sector- the part of the economy that involves the transactions of individuals and businesses.
 * free rider- someone who would not choose to pay for a certain good or service, but who would get benefits of it anyway if it were provided as a public good.
 * market failure- a situation in which the market does not distribute resources efficiently.
 * externality- an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume.
 * 1) Having goods generate positive exteralities is a good thing for the average consumer.
 * 2) A free rider is a market failure because they get away with doing nothing and still are able to buy products and live a somewhat normal life. They are very bad for the country because the government ends up paying for them to live.
 * 3) A public sector is a big corporation like NASA that get money from the government while the private sector of space travel pays for everything by wealthy endorsers.
 * 4) Positive externalities could be Dynamo computers hires underprivileged teenagers and trains them to be computer programmers, and people who buy a ratty house so they can fix it up and raise the property value of houses around it. A negative externalitie is when a company pollutes a lake and does not let people use it for recreation, or when your neighbor blasts loud music that you hate.
 * 5) The criminal justice system is a public good because it protects the citizens of America.
 * 6) I think if there is a problem like no parking then it is the cities responsibility to build a parking garage and make sure the towns people are happy knowing their car is safe and secure.

3.4 Notes questions 1-5
 * Porverty threshold- an income level is needed to support families or households.
 * welfare- government aid to the poor
 * cash transfers- direct payments of money to eligible poor people
 * in kind benefits- goods and services provided for free or at greatly reduced prices
 * the united states government has to step in to create programs to aid poor, disable, and elderly people.
 * 1) The government uses welfare to help underprivileged people live a more comfortable life and not live on the streets.
 * 2) Poverty is still in a free market because the wealth is spread unevenly throughout the society which leaves some people below the poverty threshold.
 * 3) Cash transfers are when people receive money directly and an in kind benefit is when something is given to you at a reduced price.
 * 4) Social security was made so the elderly could not have all of their money taken away from them and have the working people of the country help pay for their living expenses.
 * 5) a) To be above for an individual they would have to make $224.5 per hour and for a couple they would have to make $151.5 an hour.