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Section 1.2 Introduction to Economics
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involvement and citizens are free to make
their own economic decisions. The amount of
government involvement in mixed economies
can vary from one economy to another.
Market Forces
Market forces are economic factors that affect
the price, demand, and availability of a good or
service. In a free enterprise system, the decisions
related to market forces result in the production of
the best goods and services at the most attractive
prices. Market forces include supply and demand,
the profit motive, and competition.
Supply and Demand
The principle of supply and demand is critical
to business because it determines the price of
goods and services. Supply is the quantity of goods
available for purchase. Demand is the quantity of
goods that consumers want to purchase. The law of
supply and demand says that the price of a product
is determined by the relationship of the supply of a
product and the demand for the product.
Generally, higher demand results in higher
prices, and lower demand results in lower
prices. An increase in the supply of a product
often lowers prices. When the supply of a
product decreases, the price usually increases.
The price is the amount charged for a product.
The market price is determined at the point where
supply equals demand for a product. This point
is called equilibrium.
The law of supply and demand can be
illustrated with a supply and demand curve,
as shown in Figure 1-7. The supply curve
shows that producers are willing to supply
a greater quantity of goods at higher prices.
Goodheart-Willcox Publisher
Figure 1-7 A supply and demand curve shows the
relationship between the quantity of goods producers
are willing to supply and the quantity consumers are
willing to buy.
Law of Supply and Demand
Market
Price
Demand Supply
Equilibrium
Quantity of Goods
Price
0
The United States Environmental Protection
Agency (EPA) is a government organization
with a mission to protect human health and
the environment. The EPA is a rich resource of
information on environmental issues, such as
pollution, climate change, protecting wildlife, and
hazardous waste disposal.
The EPA publishes information on
environmental regulations by business sector. It is
important for businesses to do their part to protect
the environment. Every type of business must follow
laws enforced by the EPA. Visit
www.epa.gov
to
learn more about what individuals and businesses
can do to preserve the Earth.
Additionally, businesses can go above
and beyond what is legally required. Green
businesses lead by example and educate their
employees on sustainable business practices.
Through sustainability training, employees learn
the importance of going green at work and the
best practices to reduce waste and lower energy
consumption.
Green Business
Environmental Protection Agency