Analyze the factors that drive supply and demand, different types of market structures in a free enterprise system, and factors of stability in a nation’s economy.

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In a free-enterprise system, the factors that drive supply and demand include consumer preferences and demographics. In a free enterprise system, consumers decide which goods and services to purchase according to their wants and needs. In order to satisfy a higher demand, suppliers must increase their production when there are changes to the factors. In the opposite case, if demand decreases as a result of changes to these same factors, suppliers may need to lower their prices or production.

Four main market structures exist: perfect, monopolistic and oligopolistic competition. The perfect competition is when there are many buyers and many sellers, but no one has significant control over the pricing or the production level. Monopolistic competition happens when several firms produce nearly identical products with minor differences to give them an advantage over their competitors.

In order for an economy to be stable, the government must provide strong leadership and create a business environment which encourages both individual investment as well as corporate investments. Factors such as low interest rates on loans, reasonable taxes on incomes/corporations, minimal bureaucracy for starting businesses/obtaining permits can all lead towards stability within an economy. Additionally ensuring that everyone has access to basic necessities like food/shelter through welfare programs can also help ensure social stability within a nation’s borders.