Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 KEYS TO ECONOMIC PROSPERITY These keys to the economic prosperity of a nation are highlighted throughout the text. 1. Human Ingenuity. Economic goods are the result of human ingenuity and action; thus, the size of the economic pie is variable, not fixed. [Chapter 2] 2. Private Ownership. Private ownership provides people with a strong incentive to take care of things and develop resources in ways that are highly valued by others. [Chapter 2] 3. Gains from Trade. Trade makes it possible for individuals to generate more output through specialization and division of labor, large-scale production processes, and the dissemination of improved products and production methods. [Chapter 2] 4. Invisible Hand Principle. Market prices coordinate the actions of self-interested individuals and direct them toward activities that promote the general welfare. [Chapter 3] 5. Profits and Losses. Profits direct producers toward activities that increase the value of resources; losses impose a penalty on those who reduce the value of resources. [Chapter 3] 6. Competition. Competition motivates businesses to produce efficiently, cater to the views of consumers, and search for innovative improvements. [Chapter 10] 7. Entrepreneurship. The entrepreneurial discovery and development of improved products and production processes is a central element of economic progress. [Chapter 11] 8. Productivity and Earnings. In a market economy, productivity and earnings are closely linked. In order to earn a large income, one must provide large benefits to others. [Chapter 14] 9. Innovation and the Capital Market. If the potential gains from innovative ideas and human ingenuity are going to be fully realized, it must be relatively easy for individuals to try their innovative and potentially ingenious ideas, but difficult to continue if the idea is a bad one. [Chapter 15] 10. International Trade. When people are permitted to engage freely in international trade, they are able to achieve higher income levels and living standards than would otherwise be possible. [Chapter 17] Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 MICROECONOMICS PRIVATE AND PUBLIC CHOICE • 16E JAMES D. GWARTNEY Florida State University RICHARD L. STROUP Montana State University RUSSELL S. SOBEL The Citadel DAVID A. MACPHERSON Trinity University, San Antonio TX Australia • Brazil • Mexico • Singapore • United Kingdom • United States Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Microeconomics: Private and Public Choice, 16e James D. Gwartney Richard L. Stroup Russell S. Sobel David A. Macpherson Senior Vice President, General Manager, Social Science, Business and Humanities: Erin Joyner Product Director: Jason Fremder Senior Product Manager: Michael Parthenakis Content Developer: Christopher Rader Content Development Manager: Clara Goosman © 2018, 2015 Cengage Learning ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be reproduced or distributed in any form or by any means, except as permitted by U.S. copyright law, without the prior written permission of the copyright owner. For product information and technology assistance, contact us at Cengage Learning Customer & Sales Support, 1-800-354-9706 For permission to use material from this text or product, submit all requests online at www.cengage.com/permissions Further permissions questions can be emailed to