Profit
 Profit is the money left
over after the costs of
producing a good or
service have been
subtracted from the
revenue gained by selling
that good or service.
Producers Seek Profits
 Example: Coffee shop owners are motivated by the
desire to earn profits.
 Coffee producers charge the highest price consumers
are willing to pay.
 What is something worth?
 Motivated by profit, other producers enter the coffee
business. The profit seeking of producers, then, has
helped in the allocation of resources.
Consumers Vote with Their
Wallets
 When consumers choose to buy a product, the are
“voting” for their choice against competing products.
 These “votes” help determine what will be produced in
the future.
 Example: Low-carb foods.
High-Carb Foods
Product
Unit Sales, 2003
(in millions)
Percentage Change Over
2002
Instant Rice
79.1
-8.2
Bulk Rice
180.2
-4.9
Cookies
1,839.7
-5.5
Regular Carbonated
Soda
7,032.5
-5.9
Dry Pasta
1,227.0
-4.6
White Bread
1,606.1
-4.7
Low-Carb/High-Protein Foods
Product
Unit Sales, 2003
(in millions)
Percentage Change Over
2002
Frozen Meat/Seafood
483.5
+7.7
Meat Snacks
105.4
+7.6
Nuts
679.3
+8.8
Diet Carbonated Drinks
2,828.6
+1.0
Cheese
3,424.0
+4.0
873.1
+4.0
Wheat Bread
Modified Free Enterprise
Economy
 A mixed economy that includes some government
protections, provisions, and regulations to adjust the
free enterprise system.
 The United States, though bases on the market system,
is mixed. Government is an important element in the
American economic system, but its role is relatively
limited.
Government in the Circular
Flow Model