Essential Standard 1.00
Understand the role of business in
the global economy.
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Objective 1.01
Understand economic systems.
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Topics
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Satisfying needs and wants
Basic economic problem
Six steps of economic decision-making
Main types for economic systems
Market economy self-regulating principles
3
Market economy
self-regulating principles
4
Essential Question

What are the self-regulating principles of a
market economy?
United States Economic System
Capitalism allows the freedom of consumption and
production of goods and services.
The economic system of the United States is based on
capitalism.
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United States Economic System
continued
The four principles of U.S. economic system
are:
 Private property – can own, use, or dispose
of things of value.

Freedom of choice – can make decisions
independently and must accept
consequences of those decisions.
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United States Economic System
continued

Profit – money left from sales after all of the
costs of operating a business have been
paid.

Competition – the rivalry among businesses
to sell their goods and services.
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Market Economy
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What is the role of consumers in a market
economy?
A consumer includes individuals, businesses,
and government.
Consumers set Demand
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Market Economy continued
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
What is the role of producers in a market
economy?
Producers establish supply.
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Market Economy continued
The market economy is based on the principles
of supply and demand.
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Demand is the quantity of goods or services that
consumers are willing and able to buy.
What are some examples of consumer demand?
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Market Economy continued


Supply refers to the quantity of goods or services
that businesses are willing and able to provide.
What are some examples of producers of
supplies?
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Supply & Demand

Generates competition

Influence market (equilibrium) prices.
Supply and Demand Graphs
Intro to Business, 6e, Thomson South-Western
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Supply and Demand Graphs
Intro to Business, 6e, Thomson South-Western
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Supply and Demand Graphs

Market (equilibrium) price is the point
where supply and demand are equal.
Intro to Business, 6e, Thomson South-Western
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