The Principles of Our Market Economy Ch 14

  • Slides: 11
Download presentation
The Principles of Our Market Economy Ch. 14 Sec. 1 Pp. 374 -381

The Principles of Our Market Economy Ch. 14 Sec. 1 Pp. 374 -381

The Circular Flow of Economic Activity: Expanding the Circular Flow • Rent – payment

The Circular Flow of Economic Activity: Expanding the Circular Flow • Rent – payment for the use of land • Wages – payment for the use of labor • Interest – payment for the use of capital.

Supply and Demand • Buyers and sellers exchange goods and services through a market

Supply and Demand • Buyers and sellers exchange goods and services through a market • Markets determine price • Producers compete with each other to sell goods and services to consumers

Law of Demand • Demand – the amount of a product or service that

Law of Demand • Demand – the amount of a product or service that buyers are willing and able to buy at different prices • At lower prices, people demand more • At higher prices, people demand less

Law of Supply • Supply – the amount of a product that producers are

Law of Supply • Supply – the amount of a product that producers are willing and able to offer at different prices • At high prices, more producers are willing to supply the product • At lower prices, less producers are willing to supply the product

Supply and Demand • Price affects demand supply in opposite ways • Market Price

Supply and Demand • Price affects demand supply in opposite ways • Market Price – the price at which buyers and sellers agree to trade • Where demand supply intersect is the market price

Questions • What is the payment for the use of capital called? • a.

Questions • What is the payment for the use of capital called? • a. interest • b. profit • c. supply • d. allowance

Questions • In a circular flow of economic activity, producers need the following three

Questions • In a circular flow of economic activity, producers need the following three resources to create goods: • a. technology, workers, money. • b. rent, buildings, money. • c. labor, land, capital. • d. tools, interest, wants.

Questions • What payment do producers exchange for the use of labor? • a.

Questions • What payment do producers exchange for the use of labor? • a. interest • b. rent • c. wages • d. market price

Questions • What is the amount of a product that buyers are willing and

Questions • What is the amount of a product that buyers are willing and able to buy at different prices? • a. demand • b. supply • c. production • d. sales

Questions • What is the price at which buyers and sellers agree to trade?

Questions • What is the price at which buyers and sellers agree to trade? • a. a trade off • b. market price • c. cost of production • d. profit