Business 1301

Chapter 2

-How does economics relate to business? Can an understanding of economics help businesspeople succeed? If so how?
Economics relates to business through microeconomics and macroeconomics. By studying these two principles, a business can take a look at the economy and set prices, choose to expand, or even release a new product. Understanding economics can help a business by allowing them to make future decisions from other’s past choices.
- What are the fundamental elements of the free market economic system? How can businesses thrive within this system?
The fundamental elements of the free market economic system include the majority of business that are privately owned and are free to choose what they will produce, how much to charge, and who to employ. The fundamental rights of a free market include; the right to own and profit from a business, the right to private property, the right to choice, and the right to fair competition. Businesses thrive because they are allowed to choose the best product for their business, the best people to work for them, the best place to open their business, and have the want to do good because of their potential monetary gains.
- How do supply and demand impact the free market system?
Supply and demand are what cause change in prices of goods across the board. If a new item was put on the market and everyone wanted one, the price of that item would skyrocket. Once the market gets flooded with copy cat products, there would be an ample supply of that item and the price would drive down.
- Describe the key principles of socialist and communist economic systems. Does more government control mean less economic opportunity? Why or why not?
Socialist and communist economies are both planned economies. A socialist economy is one where the government operates key enterprises such as healthcare and