Chapter 2.2 How Economic Decisions Are Made
- Command Economy: Government determines most things
- Market Economy: personal choice
- Trasitional Economy: ran according to traditions or customs
- Mixed Economy: market abd command combined
- Cappitalism: private ownership by individuals
Different economic systems exist and are different thoughout the world, but each answers these three questions. . .
- What is being produced as goods or services
- How are they being produced
- What needs and wants will be satisfied
In the different economic systems they are all different and come about in different ways. Some based of tradition while others are based of the government. In the US we have our own system where we can have private property, freedom of choice, profit, and competition. These are very important because it lets some companies succed while others don't but this distributes profit. Succes is also effected off of the function of a business, and this is important because if it runs well inside it should work well outside too.
This person here can pick anything in the store and the is freedom of choice and then that makes competition for companies.
Chapter 2.3 What Affects Price
- Supply: how much produced
- Demand: need or desire of a product
Supply and demand are directly related because if there is no demand there is a high supply and they work best together when they are balanced. They meet at and exwuilibrium price and quantity when graphed. When doing business you need supply and demand but you also have a cost of doing business. You have two kinds fixed, cost paid not matter how much is sold, while variable costs go up and down. Business need to have perfect competition so that they can make more money and the people fill they have a choice.