Economic Systems
In this system, economic decisions are based on customs and beliefs passed down through generations.
What is a Traditional Economy?
This is the money left over after all expenses have been paid.
What is Profit?
This is the basic calculation for profit: Income minus these.
What are Expenses?
This type of risk involves the possibility of gain or loss, such as investing in the stock market
What is Speculative Risk?
A market where there are many buyers and sellers, and no one company can control the price.
What is Perfect Competition?
This type of economy is characterized by a central authority making all major production decisions.
What is a Command Economy?
These are the individuals who take the risk of starting and managing a business.
What are Entrepreneurs?
This external factor, such as a recession or inflation, can significantly lower a business's profit.
What is the State of the Economy?
Shoplifting, employee theft, and lawsuits are all examples of this specific type of risk.
What is Human Risk?
This strategy involves coupons, sales, and rebates to win over customers.
What is Price Competition?
A system where the "invisible hand" of supply and demand dictates the market.
What is a Market Economy?
This right allows individuals to own, use, and dispose of things of value.
What is Private Property?
If a business has bad weather or a supply chain breakdown, they are facing this type of factor affecting profit.
What are Chance/External circumstances?
When a business installs a sprinkler system to lower the chance of fire damage, they are using this strategy.
What is Risk Reduction?
Using celebrity endorsements or high-quality packaging is this type of strategy.
What is Non-price Competition?
This is the most common system today, utilizing both government regulation and private freedom.
What is a Mixed Economy?
In a private enterprise, this is the main driver that encourages people to work and invest.
What is the Profit Motive?
This happens to profit when a business becomes more efficient and lowers its operating costs.
What is Profit increases?
This is the most common way to "transfer" risk to another company for a fee.
What is Insurance?
This market structure is dominated by just a few very large firms (like the auto industry)
What is an Oligopoly?
This term refers to the struggle between companies for customers, a hallmark of the free enterprise system.
What is Competition?
This concept states that consumers "vote" with their wallets, ultimately deciding what is produced.
What is Consumer Sovereignty?
This internal factor refers to how well a business is run, including marketing and employee training.
What is Management?
Obsolescence, where a product becomes outdated because of new technology is an example of this risk.
What is Economic Risk?
This illegal practice occurs when competitors agree to set prices at a certain level.
What is Price Fixing?