Section+2.2

1.) How does **specialization** make us more efficient? Specialization makes us more efficient because it is better and easier for one person to learn how to do one thing well then learn ho w to do a bunch of things adequately. 2.) What is the difference between the **factor market** and the **product market**? Factor market is when firms and business purchase things from households and product market is when households purchase things from the firms. 3.) What is **profit**? Profit is the financial gain made in a transaction. 4.) What are the roles of **households** and **firms** in a market economy? A household is a person or group living in the same residence and a firm is an organization that uses resources to produce a product. 5.) How does **competition** among firms benefit consumers? 6.) Explain what Adam Smith meant by "the **invisible hand** of the marketplace." 7.) What is the connection between **incentives** and **consumer sovereignty** in a free market economy? 8.) Why is the economy equity difficult o achieve in a free market economy