Capitalism

Economics Role of Economic Systems What and how much should be produced How goods/services should be produced Who gets the good/services produced

Capitalism* 6 main characteristics Economic Freedom – Great opportunity /improved life Markets – prices for goods and services are set freely by consent between vendors and consumers Voluntary Exchanges – Buyers/Sellers willing buying/selling Profit Motive – Make money as motivation Competition – more than 1 person selling Private Property Rights – Individuals can control, benefit and transfer property.

Capitalism* Founder of modern economics: Adam Smith. Wrote Wealth of Nations (1776) Societies progress when people work out of self-interest/well-being Government’s should use laissez-faire economics. (HANDS-OFF or non-interference) Gov’ts should limit themselves to actions that promote competition.

History of Cap.* Free Enterprise in the United States Government encourages competition. Easy to open a business in general The government may regulate certain aspects of business. (i.e. – Food & Drug Act/ Social Security/ Meat Inspection Act). Why are we okay with this?

Example Big Bird goes out and attempts to buy the new Tupac CD to crank it for a party this weekend. He goes to Store #1 and finds it is sold out. He goes to Store #2 and finds it sold for $35. He goes to Store #3 and finds that they have it but at double the cost of Store #2. Does this fit the example of capitalism? If so, what principles? If not, why not?