CAPITALISM, FREE ENTERPRISE, & MARKET ECONOMY

What is Capitalism?  The United States was built largely on free markets and private ownership called Capitalism  Capitalism: an economic system in which private citizens own and use the factors of production in order to seek a profit

Free Enterprise  Free Enterprise or Market Economy is another term used to describe the American economy  In a free enterprise economy, competition is allowed to flourish with minimum government interference

The Spread of Capitalism  Two important concepts that laid the foundation for the market system that is the base of capitalism 1. The idea that people could work for economic gain 2. The idea that the government should have a very limited role in the economy

The Spread of Capitalism continued…  Laissez-faire Economics- French term that means “to let alone”  Government should not interfere in the marketplace

What makes capitalism work? 1. Private Property Rights  We have the freedom to own, use, or dispose of our own property as we choose as long as we do not interfere with the rights of others  This gives us the incentive to work, save, and invest because we can keep what we earn.

What makes capitalism work? Continued… 2. Economic Freedom  Choice is the key in a free enterprise system  Each person can choose the type of job they want and where they work  Consumers we have the right to choose the products they buy  Businesses have the right to choose the products they produce & sell  The Cost of Choice  Individuals must accept the consequences (i.e. if a individual’s business fails the government usually won’t help them out)  Profit Motive: the driving force that encourages individuals and organizations to improve their material well-being

What makes capitalism work? Continued… 3. Consumer Sovereignty  Consumer Sovereignty the idea that the consumer is “king” or ruler of the market  Consumers are the ones who determine what products will be produced (businesses try to produce the products that people want most)

What makes capitalism work? Continued… 4. Markets  Markets are where the prices of goods and services are determined as exchange takes place

What makes capitalism work? Continued… 5. Competition  Competition is the struggle that goes on between buyers and sellers to get the best products at the lowers prices  Competition keeps the cost of production low and the quality of goods higher

What makes capitalism work? Continued… 6. Voluntary Exchange  Voluntary Exchange is the act of sellers freely and willingly engaging in market transactions  Both the buyer and the seller benefit when goods and services are exchanged

Who are some Modern Day Venture Capitalist? (2 day mini-project)  Each group will be assigned a modern day venture capitalist  As a group divide up the questions/ assignments listed on the sheet to answer about your person  Research to find the answers using a computer or BYOT  Keep all your information. Tomorrow as a group you will create some type of presentation about your person. More information will follow tomorrow!