Economics Chapter 3 Section 1

Public Interest- The concerns of the public as a whole Until the mid 1900’s manufacturers of cars, food, medicine, and other products affecting people’s health and well-being were largely unregulated. The purpose of free enterprise system is to give consumers freedom to make economic choices

The freedoms given to these manufacturers offered them with incentive to test their products and publish the result in the interest of public health. Starting in the 1960’s the U.S. government became more involved in economic matters of public interest.

The resulting policies affected the production and sales of everything from toys to gasoline to margarine. Government regulation costs money and places limits on business activity and individual choices. Protecting the public interest often means giving up some amount of economic freedom

Most Americans agree that some oversight of such industries is necessary. Americans have traditionally favored economic freedom over economic regulation. Products were largely unregulated that affected peoples’ well being. A pro-business president that summed up free enterprise was Warren G. Harding.

The degree to which government should intervene in the marketplace is the subject of a vigorous debate that is as old as the nation. Americans have also come to expect protection from problems that the free market left on its own might not address, such as possible toxic substances in foods.

On the continuum from a centrally planned economy to a free market economy, this protection requires us to move away from a totally free market system. This is a trade off that most Americans are willing to make when the benefits of government protection outweigh the drawbacks to free enterprise.

Features of American Free Enterprise: Competition; producers have the right to engage in rivalries to gain business. Competing producers have an incentive to create new and better products. This gives consumers more economic choices. Contracts; Individuals and business have the right to make agreements to buy and sell goods. Such contracts may be written or oral. They are legally binding when in writing.

Private Property; Individuals and businesses have the right to buy and sell as much property as they want. Property owners may prohibit others from using their property. Profit motive; American free enterprise is driven by the desire for profit, the gain that occurs during financial dealings. Profit is a powerful incentive that leads entrepreneurs and businesses to accept the risk of business failure.

Economic Freedom; In the United States, individuals have the right to choose their occupations and to work wherever they can find jobs. Businesses can make their own decisions on whom to hire, what to produce, how much to produce, and how much to charge for their products and services. The government generally does not interfere in these decisions.

Self Interest; Consumers and producers may make decisions on the basis of their own benefit. Their decisions do not have to benefit or please the government or other consumers and producers. In a free market, consumers buying habits determine what goods get produced.

Voluntary Exchange; Consumers and producers may freely buy and sell goods when the opportunity costs of such exchanges are worthwhile, In a voluntary exchange, both parties expect to gain from the transaction.

Government responds to public interest issues by creating public policy public policy-laws and standards on topics of public interest In 1970, the Environmental Protection Agency was formed.

Interest group- a private organization that tries to persuade public officials to act or vote according to group members interest Many interest groups raise funds that are used to support political campaigns in an attempt to influence the candidates

In a free market, a consumers buying habits determine what what goods get produced If the main goal of a free enterprise is to create economic freedom and give consumers choice then they need the information to make a good decisions

One of government key roles in the economy is to provide information that is in the public interest and/or make sure that producers provide truthful information Consumers also use government info to protect themselves from dangerous products and fraudulent claims

The government publicizes public disclosure laws information through various news media. In 1906, food and drug administration was created to set and enforce standards for food, drugs, and cosmetic products

An alphabet soup of Federal agencies regulates industries whose goods and services affect the well-being of the public. Most of these agencies have a strong impact on the economy Caveat Emptor-means “Let the buyer beware” Today, the growth in the economy is also raised by spending.

Labels on the packages must include expiration dates and instructions for safe preparation. The federal government created the Occupational Safety and Health Administration in the 1970’s. This agency issues regulations on workplace safety, workplace expectations and requires public disclosure of hazards to workers.

The business complained that the rules were costly to implement, cutting into profits and slowing growth. Public Disclosure laws-laws are requiring companies to provide full information about their products In the 1980’s and 90’s, public pressure for leaner, less costly government resulted in budget cuts that curtailed some government regulation of the industry.

Identify four features of American free enterprise. -permits business to operate with the limited government involvement -creates economic freedom and gives consumer choices -provides information that is in the public interest and or make sure that producers provide truthfull information -collect and analyze data from all sectors of the economy

Give three examples of public policy issues that effect Americans’ well-being. -The government did relatively little to prevent companies from polluting the air, water, and land. -the government intervenes in the marketplace. -too much government

What role do interest groups play in public policy? Some of them raise funds that are used to support political campaigns in an attempt to influence the candidates. They help bring about change that reflects the wishes of the majority of the public. But they also bring about changes that benefit not only its members, but the society as a whole.

When was the food and drug administration created? 1906

When was the Environmental Protection Agency formed? 1970

How do public disclosure laws help give consumers economic freedom? It lets the consumers have full information about their products the consume.

What is an Interest group? A private organization that tries to persuade public officials to act or vote according to group members’ interests.

Why does the government require the businesses to provide the safety information? So that when you buy their product…something doesn’t go wrong and backfire on the company. It could cost the company a lot of money.

What makes American free enterprise so preposterous, adaptive, and enduring? The safty, the limits that consumers can do, and the level and type of government involvement in the economy

What is public interest? The concerns of the public as a whole.