The Economy •
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An economy is a system for producing and distributing goods and services within a society. Within the economy, each of us is a consumer—that is, we use, or consume, goods and services to satisfy our needs. Most people are also workers—we provide the skills and labor necessary to produce those goods and services required by consumers. •
Goods and services are exchanged in a market. Some markets are face-­‐to-­‐face (like Wawa), while others are anonymous or electronic (stock market). •
The amount paid for goods and services in a market is called its price. Sometimes people may barter, or trade, for goods and services but usually the price is paid in money. Money is anything—beads, coins, bills, checks—that is accepted as payment for goods or services. American Economic Freedoms • Built into our economy are rules protecting five important freedoms: 1. You have the freedom to buy or sell goods to anyone you wish. You are also free to charge whatever price you think they will be willing to pay. 2. You have the freedom to compete against others who are selling the same goods or services. Competition benefits the consumers. 3. You have the freedom to earn a profit. Profit comes if you can sell a good or service for more than it costs you to produce. Profits benefit the sellers and producers. 4. You have the right of ownership of your own property until you choose to sell it. The right to buy and sell property is a basic rule of the American economic system. 5. You are free to choose any career you wish. However, you are not guaranteed success! (Equality of opportunity, not outcome). America’s Economy and You • For the most part, our economy works well. However, it is based upon competition, and this means that not everyone will succeed. Not everyone has the job or career she wants, and not everyone can afford all the goods and services he would like to have. Some people are poor and cannot buy the goods or services they need. However, we are all free to compete for economic success and financial security. All of the goods and services we might want are available, but we are not always going to be able to acquire them!