Transcript Supply and Demand

Market Economy
Supply and Demand
(self-regulating principles)
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United States Economic System
Capitalism allows the freedom of
consumption and production of goods
and services.
The economic system of the United States is
based on capitalism.
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4 Principles of U.S. Economic System
• Private property – can own, use, or dispose of
things of value.
• Freedom of choice – can make decisions
independently and must accept consequences
of those decisions.
• Profit – money left from sales after all of the
costs of operating a business have been paid.
• Competition – the rivalry among businesses to
sell their goods and services.
3
Market Economy
• What is the role of consumers in a market
economy?
(A consumer includes individuals, businesses, and government.)
Decides what to buy
Decides where to buy
Decides what price they
are willing to pay
4
Market Economy
• What is the role of producers in a market
economy?
(Producers are individuals and organizations that determine what
products and services will be available for sale.)
Decides what to produce
Decides what needs & wants
to satisfy
Decides what price they
want to receive
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Market Economy
The market economy is based on the
principles of supply and demand.
– Demand is the quantity of goods or services
that consumers are willing and able to buy.
What are some examples
of consumer demand?
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Market Economy
– Supply refers to the quantity of goods or
services that businesses are willing and able
to provide.
What are some examples
of producers of supplies?
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Supply and Demand Graphs
Intro to Business, 6e, Thomson South-Western
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Supply and Demand Graphs
Intro to Business, 6e, Thomson South-Western
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Supply and Demand Graphs
• Market (equilibrium) price is the point
where supply and demand are equal.
Market Price
Intro to Business, 6e, Thomson South-Western
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