Profits
The desire to earn it is the reason for starting a business in capitalism
Economic system
Set of rules through which production is organized
Command economy
In this system the three basic questions are answered by the government
Wealth
Accumulation of products that have been produced
Division of labor
Splitting up the process of production into specific tasks
Market economy
One in which the question what is decided by what is purchased
Traditional economy
Basic economic decisions based on customs or religion
Specialized capital
Capital that increases productivity and standard of living; efficient production allows people to make this instead of goods for current consumption
Specialization
When people do one particular task and buy other things they need
Capitalism
Economic system where basic economic questions are answered by individuals and not the government
Allocation of resources
How resources are distributed in an economic system (in capitalism, decided by which firms can be profitable)
For whom?
In capitalism, decided according to the value of a person’s contribution to production
How?
In capitalism, decided by the firm’s costs if production and profits