Traditional Command Market Mixed Types of Economies Traditional Command Market Mixed

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The law of supply states that the quantity of a good supplied (i. e The law of supply states that the quantity of a good supplied (i.e., the amount owners or producers offer for sale) rises as the market price rises, and falls as the price falls. Conversely, the law of demand says that the quantity of a good demanded falls as the price rises, and vice versa. Supply and Demand

Shortness of supply. If a resource is scarce, it means that there is not a lot of it available. Buyer’s Market – In a buyer’s market, people shop around for the best price because supply is high so they want the best value for their money. Businesses usually make less money in a buyer’s market. Seller’s Market – In a seller’s market, supply is low so people may have to “settle” or pay higher prices for what they want. Businesses usually make the most profit in this market. Scarcity

4 Types of Economic Classifications for Consumer Products Convenience – Purchased without much planning. Milk/eggs Shopping – Consumers look at price and quality. Purchased less frequently. Research is conducted. Shoes/Clothing Specialty – Product has a unique characteristic so consumers will go out of their way to purchase it. Laptops/Cell phones Unsought – Products that customers do not know a lot about. They don’t think of purchasing them until they are needed. Home theater system 4 Types of Economic Classifications for Consumer Products

5 Types of Economic Classifications for Industrial Products Materials – Parts and raw materials are purchased and turned into sellable items. Purchasing water for shampoo. Parts – Items that are purchased by a business to add to their own product without making any changes to the part. Purchasing bottles to put shampoo in. Installation –Major machinery purchased to produce products. Hotels wash their linens daily in a washer. Equipment –Less expensive tools used in the production process. Don’t last as long as installation items. Vacuums to clean a hotel room. Supplies – Items that are frequently purchased by businesses that are indirectly related to the production process. Staplers, pens, etc. 5 Types of Economic Classifications for Industrial Products

Free Enterprise System An economy in which both the consumer and private businesses make the majority of the economic decisions. 4 Elements of this system: Risk (the potential for loss) Competition (rivalry) Profit (ability to keep money after costs are deducted) Freedom of Ownership (The ability to own any type of business or personal items (within the law). Some areas are zoned for special purposes. Free Enterprise System

Ultimate Goal of Free Enterprise? Satisfy the consumers needs/wants while making a profit! Profit: Total Revenue-Total Expenses Ultimate Goal of Free Enterprise?

What’s so Great About Competition? Competition leads to lower prices and higher quality products Price Competition – Business lower their prices opt compete with other suppliers. This saves the consumer money. Non-Price competition – Focuses on improving the quality of a product so people will buy your product over the competition. What’s so Great About Competition?