Unit 1 Section 3 - The American Economy (Market)

American Economy

incorporates main characteristics of free enterprise economy (Market) and limited government involvement

Factors of production

land, labor, capital, entrepreneurship

Supply

The amount of a good or service a producers is willing and able to provide at a certain price

Demand

the amount of a good or service that consumers are willing and able to buy at a certain price

competition

the struggle among producers for the dollars of consumers

shortage

A situation in which quantity demanded is greater than quantity supplied

surplus

A situation in which quantity supplied is greater than quantity demanded

equilibrium price

the price at which the quantity demanded equals the quantity supplied

land

all natural resources used to produce goods and services

labor

Human effort directed toward producing goods and services

Capital

includes the cash and other financial assets held by an individual or business, and is the total of all financial resources used for growth and build financial stability of the business

Entrepreneurship

the process of bringing together the three factors of production - natural resources, labor and capital - the person who does this is an entrepreneur.