Individual and market demand schedules

- Table that lists the quantity of a good that one person will buy at each price. It’s a $1- 5
person quantity

Modern Economies of Russia and China

- They both were communist but are starting to stray away. China is doing better
with their stock market being private and them having the second highest GDP
rate. Russia has a civil chamber but their complaints don’t get fixed, Putin is a
tyrant, and they have the 12th highest GDP

7 Basic Principles of the free enterprise system

1. Profit motive- encourages people to make money
2. Open opportunity- everyone can compete in the market
3. Legal equity- everyone has the same legal rights
4. Private property rights- people have the right to control their possessions as they see fit
5. Free contract- people may decide what agreements they want to enter into
6. Voluntary exchange- people may decide what and when they want to buy and sell
7. Competition- rivalry among sellers to attract customers while lowering costs

Reasons why the USSR collapsed

- The best resources were given to the military and also went to the space race
- There was no incentives for the citizens, they didn’t have to work hard because their
salary and jobs were guaranteed
- The goods were scarce and poor quality

Capitalism- economic system in which a country's economy is controlled by private owners

rather than the state EX: United States

Communism- political system based around a centrally planned economy in which all economic
and political power is in the hands of government EX: Soviet Union

Socialism- social and political philosophy that is based on the idea of distributing wealth equally
among people through a democratic means EX: North Korea

Competition- struggle among producers for the money of consumers, regulating force in the free
market

self- interest - one’s own personal, motivating force behind the free market

Transition- Russia and China were a communist economy but they were moving towards a
mixed

Economic rights guaranteed to americans

 1. Property rights- no person shall be deprived of life, liberty, or property without the
due process of law
2. Taxation- congress can raise or lower taxes
3. Contracts- individuals or businesses cannot use the political process to get
excused from their contracts

Adam Smith- He wrote the wealth of nations in 1776. He became so famous because the format
he wrote it in was able to be read by everyone and it was composed of many different ideas.
The two main ideas related to capitalism are Laissez-faire and the invisible hand. Laissez-faire
is limiting government intervention in the economy. The invisible hand is the way in which the
market regulates itself through self-interest and competition working together

Incentive- expectation that encourages people to behave in a certain way

Macroeconomics- study of behavior and decision making of entire economics EX: stock market,
international business, GDP, taxes

Microeconomics- study of economic behavior and decisions of small units, such as individuals,
families, and businesses EX: individual work ethic, use of tech

GDP- total value of all final goods and services in a particular economy

Free rider- someone who would not choose to pay for a good/service but gets the benefit of it
anyway through a public good EX: illegal immigrants on highways

The first amendment and social media companies- They are public so they can sensor accounts
EX: Trumps twitter

Ethics- what’s morally right in your opinion, some people rule off ethics but others throw it out
the window

Demand- the quantity of a good or service that consumers are willing and able to buy at various
prices

Law of demand- as the price of a good or service increases, the quantity demanded decreases,
and vice versa

Substitution good- goods that are used in place of one another which satisfy the same basic
want as another product

Complementary good- a product that is used together with another product

Demand curve- a graphic representation of demand schedule

Factors that change the demand of a good- income, numbers of consumers, consumer tastes
and preferences, consumer expectations, price of substitute goods, price of complementary
goods

How demographic trends impact demand- demand follows trends, companies have to cater to
them

Normal goods- good that consumers demand more of when the income of the consumer
increases

Inferior good- good that consumers demand less of when the income of the consumer increases

Elastic- describes demand that is very sensitive to a change in price

Inelastic- describes demand that is not very sensitive to a change in price (ex: gas, medicine)

Factors that affect elasticity

1. Availability of substitutes
2. Price relative to income
3. Necessities vs. luxuries
4. Price changes over time

Total Revenue- the total amount a firm receives by selling goods or services

Privatization- the transfer of a business, industry, or service from public to private ownership and
control

Public good- shared good/service that doesn’t make sense to exclude people who don’t pay for
it, or to make consumers pay individually for it

Elasticity- measure of the degree to which the quantity demanded or supplies of a good or
service changes in response to change in price

Vladimir Putin- Leader of Russia, kinda like a dictator