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Understanding Free-market capitalism

Understanding Free-market capitalism - The equilibrium...

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Understanding Free-Market Capitalism Capitalism- An economic System in which all or most of the factors of production and distribution are privately owned and operated for profit. Foundations of Capitalism People under free market capitalism have four basic rights Right to private property Right to own a business and to keep all of that business’s profits The right to freedom of competition The right to freedom of choice How free markets work By buyers and sellers negotiating prices for goods and services How prices are determined Free markets- Determined by buyers and sellers negotiating I the marketplace The econ concept of supply Supply refers to the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time. Econ Concept of demand Demand refers to the quantity of products that people are willing to buy at different prices at a specific time
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Unformatted text preview: The equilibrium point, or market price Supply = Demand Market price is determined by supply and demand Competition with free markets Perfect competition- the market situation in which there are many sellers in a market and no seller is large enough to dictate the price of a product Monopolistic competition- the markets situation in which a large number of sellers produce products that are very similar but that are perceived by buyers as different Oligopoly- A form a competition in which just a few sellers dominate the market. Monopoly- a market in which there is only one seller for a product or service Benefits and Limitations of Free markets Free markets bring inequality Capitalism encourages businesses to be more efficient so they can successfully compete on price and quality Businesspeople and others may let greed dictate how they act...
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