Notes 9/28: Econ mini lesson

Market Economy: Where the economy decides how much to produce, and who to produce it to; supply and demand. An ideal.

Free-market economy: No government control.

  • Depends on resources. (labor)
    • Quantity of resources. (how much real estate you own)
  • Values the market places, on resources that you own.

Private Enterprise: All the resources in the economy, are owned by private individuals.

Corporation: group of private ownership.

Wealth: Investments, inheritance, savings.

Income: What you earn.

Net worth: Assets- liability. (Everything you own – everything you owe)

  • Wealth inequality is worse than Income inequality.

What determines the income we earn on all the resources that we own? Every resource has a market, will determine how much your resource is worth.

  • Demand: as the price increases, than the demand will decrease. The quantity. Willingness and ability to buy.
  • Supply:  How much sellers want to sell/ make a profit.

Profit: Measure of how valuable a product is.

Prices: Demand and supply.

Surplus: When supply is more than demand.

  • Prices drop

Deficit/Shortage: When demand is more than supply.

  • Prices increase.

Equilibrium: When demand and supply are equal.

  • Price stays the same. Stability.

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