| A | B |
|---|
| free enterprise system | encourages individuals to start and operate their own businesses without government involvement. |
| price competition | focuses on the sale price of a product The assumption is that all other things being equal, consumers will buy the product that are the lowest in price. |
| nonprice competition | businesses choose to compete on the basis of factors that are not related to price. Factors include quality of the products, service and financing, business location and reputation. |
| monopoly | is exclusive control over a product or the means of producing it |
| risk | the potential for loss or failure in relation to the potential for earnings get greater, so does the risk. |
| profit | is the memory earned from conducting business after all costs and expenses have been paid. |
| supply | is the amount of goods producers are willing to make and sell |
| law of supply | is that as prices rise for a good, the quantity supplied generally rises and the price falls, the quantity supplied by the seller also falls. |
| demand | refers to consumer’s willingness and ability to buy products |
| law of demand | is an economic theory that states that as the price of a good increases the quantity of the good demanded falls. |
| surplus | occur when supply exceeds demand. |
| shortage | when demand exceeds supply |
| equilibrium | When the amount of a product being supplied is equal to the amount being demanded |
