employs
people within an economy. Without jobs, people cannot purchase goods and services. People
employed in businesses also create goods and services for others to purchase. Sometimes this can
include selling directly to the consumer, such as a hamburger chain selling food to a patron.
Other times, businesses can sell to other businesses, such as when wholesalers sell goods out of
a warehouse to grocery stores. All of these businesses operate under the laws of supply and
demand where businesses compete by a combination of offering superior products and lower
prices.
Business also drives the economy through investment. People looking
to build wealth over time or to generate a stream of income from dividends choose to invest in
businesses. Businesses encourage investment by keeping their profit margins large and their cost
of doing business low. By doing this or even demonstrating the potential to do these two things,
businesses help drive the economy by encouraging investment.
These aspects of
business are true of a market economy, an economy driven by people's free choice to produce and
consume.
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