Mommy! Can I please get this new phone?! It's HALF OFF!! I NEED it!!
No, bobby. You just got a new phone last year and it works great. You don't actually need it. You want it. There's a difference.
Okay, I think I understand. But it's on sale and there's so many of them!
whOOooOOo!They won't be this popular for very long. The company is just at its peak right now.
Supply and Demand
Yes, they do have very many. The phone company produced a bulk load of phones because they know everyone wants to buy them. It's called supply and demand.
50% OFF!LIMITED TIME!!
WHOA?!!!What was that?
That was weird. But, it gives me a chance to talk about Business Cycles. There are four different phases in a business cycle. This phone company is at what we call, the peak.
A need is something that you need to survive such as food and water. A want, on the other hand, is something that you can live without but will still be nice to have. An example would be the phone that Bobby wants.
HEY! GET BACK HERE!!
Supply is the amount of a product a company is producing. Demand is the amount that the consumers want. When one or the other is two high or low then there may be problems for the company. But, the phone company depicted in here, knows what they are doing.
Types of Economic Systems
That was so crazy!!
Yeah, it was! But anyways, back to what we were talking about. There's a lot of things that go into a business such as supply/demand, a business cycle, and economic systems. We use a mixed system here in Illinois but other places use a variety of different ones.
Expansion: When a nation's GDP experiences an upward movement.Peak: When the GDP is at its highest level.Contraction: This phase is the economicslowdown when everything starts crumbling down.Trough: This is when the GDP is at its lowest.
Wow! This is all so cool! Thanks for telling me this. I had no idea business' were so complex, and I guess I don't really need that phone after all.
HEHE, more phones for me!!
There are four different economic systems: mixed, traditional, market and command. While they are all different they share similar qualities such as the fact that they all rely on resources, government, and how they all start from the same goal of making money.