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Essential Economic Vocabulary Economy – a system for producing, distributing and consuming goods and services Producer – owners and workers Goods – products or items that are sold. Services – producers perform these for other people Consumer – people who buy and use the goods and services Production – the process of manufacturing or growing something Distribution – the delivery of products to various places . Consumption – the use of goods and services Natural Resources – things that exist freely in the nature for human use. Human Resources – set of people who make up the workforce of a an organization . Capital Resources –assets for the production of goods and services ex. Machines Capitalism – most basic and non-basic businesses are privately owned. Socialism – the government owns most basic industries for good of society. Law of Supply and Demand Supply – refers to the quantity of resources available in the market for sale at a given period of time. Demand – is the quantity of a good that consumers are willing to purchase at various prices during a given period of time. The law of supply and demand refers to one of the core concepts in economics explaining the relationship between demand, supply, and price of products and services. It integrates the concepts of the law of demand and the law of supply. The laws of supply and demand are basic concepts helping businesses analyze the best-selling price, the ideal supply rate, and the readiness of a market for a new product. The law of demand explains that when the price increases demand decreases. The law of supply explains that when the price increases seller increases the supply to obtain maximum profit. Equilibrium prices showcase the price at which supply and demand are equal and satisfying in the market. The 4 Basic Laws of Supply and Demand Demand increases, and supply remains the same: In a competitive market, this will cause an increase in the price. The shortage of products increases the value of the product. Demand decreases, and supply remains the same: In this situation, the price reduces. If the demand continues to decline, there will be a surplus of the product in the market, subsequently dampening the product’s value. Supply increases and demand remains unchanged: The easy availability of a product causes a decrease in its price, manifesting an oversupply scenario if the demand remains intact for long. Supply decreases and demand remains unchanged: When supply decreases, and there is no increase or decrease in demand, the price will increase.