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What is Economic Prosperity? The text points to 12 keys that ultimately lead to economic prosperity, or progress. The 12 keys are human ingenuity, private ownership, gains from trade, invisible hand principle, profits and losses, competition, entrepreneurship, link between productivity and earnings, innovation and the capital market, price stability, international trade, and government and the environment for prosperity. Each of the 12 keys will be identified and discussed throughout this paper.
The first thing is defining economic prosperity and how it relates to the world in which we live. Economics is the study of what constitutes rational human behavior in the endeavor to fulfill needs and wants (http://www.investopedia.com/university/economics/). Prosperity is an economic state of growth with rising profits and full employment. Simply put, individuals choose how they will best utilize resources based upon increase or decline in profit or as it relates to scarcity. Scarcity is "the fundamental concept of economics that indicates that there is less of a good freely available from nature than people would like" (Economics Private & Public Choice, 11th edition, page 6). The textbook speaks of "The Economic Way of Thinking", and this way of thinking is all about how incentives alter the choices people make (page 3). Human ingenuity demonstrates economic prosperity.
Human Ingenuity, the first key, states that economic goods are the result of human ingenuity and action; thus, the size of the ?economic pie" is variable, not fixed. The creation of wealth occurs in a society when participants contribute to the economy. Each individual is unique ...