1 The economic system of countries such as Japan, Canada, Germany, and the United States is the free enterprise system-in other words, , buy and sell what they want. They are free to start a new enterprise-business.
2. In the free enterprise system, the government does not determine the price of products. The market determines it. , stock markets, farmers’ markets, meat markets, and gold markets. We can buy and sell things by mall, by phone, and by computer. These are all part of the market-the exchange of goods and services by buyers and sellers.
3.he market determines the price of products by two general rules: the laws of demand and supply. For example, how many tomatoes will consumers buy at various prices? This is demand. The law of demand states that consumers (buyers) usually buy more of a product at a lower price. How many tomatoes will the sellers product at various prices? This is supply. Consumers, of course, want a low price, but producers need to make a profit .The actions of consumers and producers determine the price.
4.Let’s look at an example. A supermarket has a supply of 600 pounds of tomatoes at $1.99 a pound. After two days, customers have bought only 100 pounds. Soon 600 so she lowers the price to $1.09 a pound. At this low price, customers soon buy all 500 pounds. This is the equilibrium price (the point where supply and demand meet).
5. In the Organization of the Petroleum Exporting Countries (OPEC) stopped sending oil to Western nations, so there was a shortage of gas and oil in many countries. Prices went up over 30 percents (%).In1974, the supply of oil to the West went down again because of the revolution in Iran ,so prices went up again .Consumers and businesses looked for ways to use less gas and oil. They were successful. Demand went down, so prices started to go down. The free enterprise system was working
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