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 Valentine’s 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 nation’s 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.





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United States – Dollar
Japan – Yen
China – Yuan
Canada – Canadian Dollar
UK – Pound
Mexico – Peso