Copyright Goodheart-Willcox Co., Inc.
Section 1.2 Introduction to Economics
17
than people were several decades ago. The result
is a greater and growing demand for products
like fitness equipment and foods with high
nutritional value.
Profi t Motive
Profit is a powerful market force. Profit is
the difference between the income earned and
expenses incurred by a business. The profit motive
is one reason people choose to start and expand
businesses. Even though many businesses are
created because the owners are looking for
personal satisfaction, independence, and other
advantages, profit is the driving force.
Competition
Competition among businesses is an
important factor in a free enterprise system.
Competition is the action taken by two or
more businesses attempting to attract the
same customers. Because consumers have the
freedom to choose the goods and services
they buy, businesses must work to win each
consumer’s business.
Check Your Understanding
1. What is the basic economic problem?
2. List the four factors of production a nation
uses to make goods and supply services for
its population.
3. What are the four economic systems?
4. What are market forces?
5. Identify three market forces that impact
business.
Build Your Vocabulary
As you progress through this course, develop a
personal glossary of key terms. This will help you
build your vocabulary and prepare you for a career.
Write a definition for each of the following terms and
add it to your personal glossary.
economics
factors of production
labor
capital
capital goods
entrepreneurship
entrepreneur
scarcity
trade-off
opportunity cost
systematic
decision-making
economic system
traditional economy
command economy
market economy
capitalism
mixed economy
law of supply and demand
competition
Section
1.2 Review