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Question 1

Compare and contrast the four main economic systems. Explain how the characteristics of the private enterprise system in the United States are similar to or different than the different types of economic systems, including traditional, centrally planned, market, and mixed economies.
Question 2

Your manager has asked you to create a slideshow presentation on the characteristics of business. Using your knowledge of the principles of supply and demand, create bullet points you would use for three different slides, as well as a title for each slide. Your points should cover information on the two laws, as well as economic equilibrium and the effects of supply and demand on a free enterprise system.
Question 3

Jasmeet is opening up a smoothie shop. Identify the various business cycles that her shop will inevitably go through and describe what she can expect from them. Explain two specific ways Jasmeet can adapt to economic downturns for her business.
Question 4

Mr. Dubose owns a shoe store but has noticed that fewer customers are frequenting his shop and his sales have been down. What are three specific ways that Mr. Dubose can incorporate technology to move his business to a more productive business cycle? How would these changes positively affect Mr. Dubose’s business operations?
Question 5

Think about the COVID-19 pandemic, when many necessary products for human wants and needs (milk, eggs, toilet paper, sanitation wipes, etc.) were hard to come by in stores. How did this scarcity, coupled with consumer demand, affect the economy? Explain.

1 answer

Question 1

Comparison of Economic Systems

  1. Traditional Economy:

    • Based on customs and traditions.
    • Often agrarian, with little technological advancement.
    • Goods and services are produced for personal use and barter is common.
    • Example: Indigenous tribes.

  2. Centrally Planned Economy:

    • The government makes all economic decisions.
    • Resources are allocated according to a central plan.
    • Often leads to inefficiencies and lack of innovation.
    • Example: North Korea.

  3. Market Economy:

    • Decisions are made through the interactions of buyers and sellers.
    • Prices determined by supply and demand.
    • High levels of competition and consumer choice.
    • Example: United States (in part).

  4. Mixed Economy:

    • Combines elements of both market and planned economies.
    • Government regulates certain industries while others are left to the free market.
    • Example: France, Sweden.

Private Enterprise System in the United States:

  • Similarities with Market Economy:

    • High degree of consumer choice.
    • Prices set by supply and demand.
    • Entrepreneurs drive economic growth.

  • Differences:

    • Stronger regulations compared to pure market economies (e.g., anti-trust laws).
    • Government role in welfare and provision of public goods differs from pure market economies.
    • Balance with mixed economy elements, allowing for both private ownership and some state-directed ventures.

Question 2

Slide 1: The Law of Demand

  • As price decreases, quantity demanded increases (inverse relationship).
  • Consumer preference influences demand; trends can shift demand curves.
  • Examples of factors affecting demand: income changes, population, and substitute goods.

Slide 2: The Law of Supply

  • As price increases, quantity supplied increases (direct relationship).
  • Producers are willing to create more of a product at higher prices.
  • Factors affecting supply include production costs, technology, and seller numbers.

Slide 3: Economic Equilibrium

  • Equilibrium occurs when quantity supplied equals quantity demanded.
  • Prices naturally adjust to reach equilibrium where the market is stable.
  • Shifts in supply or demand cause new equilibrium prices and quantities.

Question 3

Business Cycles for Jasmeet's Smoothie Shop

  1. Expansion: Growing customer base, boosting sales.
  2. Peak: Highest point of sales; maximizing profits.
  3. Recession: Sales decline; fewer customers due to economic slowdown.
  4. Trough: Lowest point; need for strategic adaptation to survive.
  5. Recovery: Gradual return of customers and sales.

Ways to Adapt to Economic Downturns:

  1. Diversifying Menu: Introduce budget-friendly options or limited-time deals to attract price-sensitive customers.
  2. Engaging in Promotions and Discounts: Utilize sales promotions to attract new customers and retain existing ones.

Question 4

Incorporating Technology in Mr. Dubose's Shoe Store:

  1. E-commerce Platform:

    • Benefits: Expands customer reach beyond the physical store, facilitates online orders, and provides tracking analytics.

  2. Point of Sale (POS) System Upgrade:

    • Benefits: Streamline checkout process, track inventory in real-time, and better customer management.

  3. Social Media Marketing:

    • Benefits: Engage with customers, promote new arrivals, and create online community; negatively impacted by a decline in foot traffic.

Positive Effects on Business Operations:

  • Increased sales through online channels, improved customer experience, and efficient inventory management lead to higher retention rates and customer satisfaction.

Question 5

Impact of Scarcity and Demand During COVID-19:

  • Scarcity of essential goods led to increased consumer demand and panic buying.
  • Resulting shortages caused prices to rise, affecting overall supply chains and leading to inflation on essential items.
  • Businesses faced challenges meeting demands due to supply chain disruptions, leading to more pronounced economic instability.
  • Government responses included price controls and stimulus efforts which aimed to stabilize the economy amid fluctuation in consumer behavior.