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.