EPF2: Economic Systems

EPF. 2h-j


Competition has different effects on producers, sellers, and consumers. Competition among sellers lowers costs and prices because they want you to buy their product rather then the other companies.
Whereas, competition for producers encourages them to produce more of what the consumers are willing to buy.

Competition among consumers increases prices and allocates goods and services to those who are willing and able to pay the most for them.

EPF. 2 I

Monopolies reduce competition because they beat out all their other competitors so that they control all aspects of a certain product. Once they do that they are free to sell the good at any price and consumers have to buy it.
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EPF. 2 J

Circular flow of economic activity: Firms supply goods and services while households consume these goods and services.

The circular flow of models is important in an economy because

1) measures national income

2) provides knowledge of interdependence

3) illustrates the unending nature of economic activities

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Consumer Sovereignty: Where in an economy the desires and needs of consumers controls the output of producers.

Sole proprietorship : A type of business that is entirely owned and run by one person.

Partnership : Where two people own and run a business together with equal responsibilities and liabilities within it.