1. Suppliers produce whatever goods and services they wish and set prices on what consumers are willing to pay. Prices are responsive to consumer demand. Characterized by Voluntary Exchange (a transaction where both parties feel that they benefit)
2. Key Terms: Free Enterprise System another name for a market economy. Capital another name for cash and goods a business owns.
3. Supply the quantity of goods and services a business is willing to sell at a specific price. Demand is the quantity of goods and services consumers are willing to buy Timing is key and important when figuring out the economy.
4. A supply curve on a graph shows the quantity of a product or service a supplier is willing to sell across a range of prices. Quantity is on X Axis, while Price is on Y Axis
5. A demand curve on a graph shows the quantity or service consumers are willing to buy. Axis on the demand graph are same as supply.
6. When you place both curves on the same graph you can identify the equilibrium price, which is the desired spot of supply and demand in an economy.
7. Competition Between Suppliers: If a supplier lowers prices, consumers typically buy from that supplier. This initiates an incentive for buyers.The other benefit of competition is that it forces companies to be innovative and create variety.
8. Competition Among Consumers: When consumers compete for products, it has a different effect. It pushes prices upward. Examples would be flowers at Valentines Day and toys at Christmas.
9. Profit Motive: Is an incentive that encourages entrepreneurs to take business risks in the hopes of making a profit.Different Type of Profit: Non-Profit Organization: Operate solely to serve the good of society. Money comes into the non-profit through donation, government grants, or the sale of goods. Money is then put back into the cause which started the organization. (Red Cross)
10. The global economy is the flow of goods and services around the whole world . No nations economic flow is confined within its own borders. Even though scarcity effects what is produced and how much, globally nations are forced to specialize in goods and services.
11. Exporting Is the business activity in which goods and services are sent from a county and sold to foreign consumers.Importing The business activity in which goods and services are brought into a country from foreign suppliers.
12. Goods are physical objects that can be shipped by plane, train, or ship. Services are different, they must physically move people across borders to perform their specialty.
13. Advancements in telecommunications phone, fax, email, and Internet have made the global trading market much easier than in the past.
14. Entrepreneurs can benefit from international trade both by importing and exporting goods. Risks in International Trade: Must learn about economic and monetary systems. Learn about government regulations Learn about cultural factors involved.
15. Governments are more protective of their natural resources within their borders so they put restrictions on trade: Nations want to help their own businesses before foreign. Governments want to protect their consumers from unsafe or poor quality goods.
16. Trade Barrier Tariff Governmental restriction placed on international trade. A fee, similar to a tax, that importers must pay on the goods they import.Quota Is a limit on the quantity of a product that can be imported into a country.
17. Many types of money are in use around the world, but not all amounts of money are equal in each country. United States Dollar Japan Yen China Yuan Canada Canadian Dollar UK Pound Mexico Peso