Joey and Jason plan to open a music store targeting retirees by selling rap CDs. However, this target market and product type is mismatched. Businesses contribute positively to society through job creation, tax revenue, and innovation. There are barriers that make it difficult for new businesses to enter an industry like startup costs, licensing, and existing competitors. Price lowering is appropriate in a recession to stimulate demand. A free market has private ownership and minimal government while a planned economy has centralized government control over production and allocation.

1. Intro to Business Exercise 1.0
1. Joey and Jason have recently obtained a license to set up business. They are
free to set up any business of their choice. In the end, they have decided to
target a large retiree community and open a music store selling Rap CDs (e.g.
Eminem, Snoop Dog). Comment on their decision.
2. Businesses are good for the society. Discuss how they can contribute. Provide
two (2) specific examples for each type of contribution.
3. Define the term “barrier to entry”. Which type of business (goods-producing or
service) has bigger barriers to entry? Why?
4. List two (2) types of barriers to entry and give one example for each type.
5. In which economic condition should a business lower the price of its product
and services? Why?
6. Explain what a free market or capitalistic economy means? And a planned
economy?