Page 80 - Business Principles and Management

Chapter 3 • Economic Environment of Business

determine the prices of goods are also important factors in determining wages
and salaries; that is, the amount of wages paid for a particular kind of labor is
affected by the supply of and demand for that kind of labor. The demand is low
and the supply is high for unskilled workers. Thus, the price (income) of unskilled
workers is low. On the other hand, the demand for brain surgeons is high in terms
of the supply of brain surgeons and the services they provide; therefore, their price
(income) is high.

CHECKPOINT
What special feature of a free-enterprise system helps keep the
prices of goods and services down?

3.3 Assessment

UNDERSTAND MANAGEMENT CONCEPTS
Circle the best answer for each of the following questions.
1. Items of value that individuals have the right to own, use, and sell
are known as
a. public goods
b. product utility
c. private property
d. all of the above
2. The number of products that will be bought at a given time at a
given price is called
a. supply
b. demand
c. price
d. quantity

THINK CRITICALLY
Answer the following questions as completely as possible.
3. Explain how the overestimation of profits earned by a business can
affect a society.
4. Explain how supply and demand help determine
the price of goods and services.

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