TheAmericaneconomicsystemisorganizedaroundabasicallyprivate-enterprise, market-orientedeconomyinwhichconsumerslargelydeterminewhatshallbeproducedbyspendingtheirmoneyinthemarketplaceforthosegoodsandservicesthattheywantmost. Privatebusinessmen, strivingtomakeprofits, producethesegoodsandservicesincompetitionwithotherbusinessmen; andtheprofitmotive, operatingundercompetitivepressures, largelydetermineshowthesegoodsandservicesareproduced. Thus, intheAmericaneconomicsystemitisthedemandofindividualconsumers, coupledwiththedesireofbusinessmentomaximizeprofitsandthedesireofindividualstomaximizetheirincomes, thattogetherdeterminewhatshallbeproducedandhowresourcesareusedtoproduceit.
Animportantfactorinamarket-orientedeconomyisthemechanismbywhichconsumerdemandscanbeexpressedandrespondedtobyproducers. IntheAmericaneconomy, thismechanismisprovidedbyapricesystem, aprocessinwhichpricesriseandfallinresponsetorelativedemandsofconsumersandsuppliesofferedbyseller-producers. Iftheproductisinshortsupplyrelativetothedemand, thepricewillbebidupandsomeconsumerswillbeeliminatedfromthemarket. If, ontheotherhand, producingmoreofacommodityresultsinreducingitscost, thiswilltendtoincreasethesupplyofferedbyseller-producers, whichinturnwilllowerthepriceandpermitmoreconsumerstobuytheproduct. Thus, priceistheregulatingmechanismintheAmericaeconomicsystem.
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