Free Enterprise System
In a Free enterprise system, everyone has the choice to
Start a business or enterprise
What is a Public Good? Provide an example
Goods and services provided by the government
Ex) streetlights, law enforcement
The _____________ states that when price goes up demand goes ___________ and when price goes down demand goes _____________
-Law of demand
-down
-up
Demand is ________ when quantity demanded changes when prices increase
Elastic
The price of Jelly increases, the demand for peanut butter will __________ because it is a ________________________
Decrease, complimentary good
When there are more businesses in a market, what increases?
competition
What is a Free Rider?
Someone who gets the benefit of a good or service without paying for it
Ex) People watching a firework show
When PRICE is the only thing changing, we see movement along the demand curve because the _____________ is the only thing changing with the price
Quantity Demanded
Demand is ________ when quantity demanded does not change when prices increase
Inelastic
Meteoroligists predict a large hurricane on the Eastern coast, demand for batteries and toilet paper will __________ because of ____________
What incentivizes someone to start a business?
What is a Negative and Positive Externality?
When people not involved in an economic activity get 2nd hand benefits or costs
Ex) Neg= road construction, pollution
Ex) Pos= Viewing a Christmas light show
What is the difference between an individual demand curve and a market demand curve?
What is an example of an Inelastic good?
-Gas, Meds, Insulin, Electricity, plumbing
When demand increases, the line shifts which way?
When demand decreases, the line shifts which way?
Right
Left
Name AND explain one of the three legal rights of a F.E.S
-Open Opportunity= everyone has the same ability and chance to enter and compete in any marketplace
-Legal equality= Everyone has the same economic rights
-Free contract= everyone has the same right to decide what contracts to engage in ex) working for someone
What is a PUBLIC transfer payment? Provide an example
When the government transfers income from tax payers to someone that gives nothing in return
Ex) Welfare checks, food stamps, Social security
Name and explain 3 of the Demand Determinants
-Income= how much $ someone has
-Expectations= what will happen in the future
-Tastes= Peoples preferences, trends
-Substitutes= when there is a replacement
-Complimentary goods= when goods and services go hand in hand
-Market size= change in the number of people
Elastic, there are substitutes and different ranges of prices to choose from
A large group of people move to a new area, demand for goods and services will _____________ because a change in ____________
Increase, Market size
When something is not being allocated for by businesses and consumers, who has to be responsible for it?
The government in a Modified Free Enterprise System
What is a subsidy and what is used to pay for them?
A government payment that helps cover the cost of an economic activity that has the potential to benefit the public as a whole.
Paid for with TAXES
When there is a change in _____________, we see the demand curve __________ in or out
demand, shift
What are the 3 Determinants of Elasticity?
-Does it have a substitute?
-What proportion of Income does it use?
-Is it a Need or a Luxury?
Why do does quantity demand not shift for products like pens when price increases?
Because you are only using a small amount of income, so consumers don't really mind price increases that are exponentially large