Economic Inequality and the American Dream

The Basics of Economics

These are the notes I took from Friday, September 28th.

  • Market Economy – The market where economic demand is deciding what is produced and for what price (Supply and Demand).
  • Free Market Economy = no government involvement and has limits on private ownership.
  • Private Enterprise – all the resources and means in the economy owned by an individual or a group of individuals.
  • Income depends on two things:
    • resources owned and everything else you own (real estate, savings).
      • One’s labor is the most important resource.
      • School is enhancing the value of one’s labor.
    • The value the market places on your resources.
  • Wealth – Things that are not income.
    • Investments
    • Gifts
    • Inheritance
    • Savings
  • Net Worth – all that you own MINUS what you owe.
  • Every resource you own has its own market and determines the income that you will earn from that resource.
  • Demand – The amount the customers are willing and able to buy.
    • The price will increase and the demand will decrease (vice versa).
    • People buy more at lower prices.
  • Supply – how much sellers are willing and able to sell.
    • Businesses are there to make a profit.
  • Profit – Measure for how much the people are willing to pay for an item.
  • Prices are created buy the buyers and sellers.
  • Surplus – when buyers do not buy a product because it is to expensive.
  • Shortage – when a business runs out of a product because the price was to low and in demand by customers.

 

 

One Comment

  • Steven Greenlaw

    People who read this post should compare it with Diana’s. Between the two, one gets a really good summary of the discussion.

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