Benefits of Free Enterprise Basic Principles Profit Motive – trying to improve your well-being Open Opportunity – anybody can go up or down Economic Rights Equality Private property Free contracts Voluntary exchange Government’s role Information Flow Protecting Health, Safety and Well-being Lots of competition Not always good for businesses/economy

Providing Public Goods What is a public good? What are examples of public goods? Who pays for them? What is the Free-Rider problem?

Externalities Are there ever side-effects to making an economic decision that affects the people around you? Externalities can be positive or negative Government’s role in managing externalities? Encourage positive externalities – tax incentives Discourage negative externalities – laws and rules

Providing a Safety Net Poverty threshold in the U.S. for a single parent with 2 kids is $18,498 per year (U.S. Census Bureau 2012) U.S. Government provides a safety net in the form of cash transfers from better off to less better off Temporary Assistance for Needy Families Social Security Unemployment Insurance Workers’ Compensation Other benefits are provided on a non-cash basis Food assistance Medical benefits (Medicaid, Medicare) Education (pre-school, special needs, college assistance)