AMERICAN FREE ENTERPRISE Taught by Professor Coleman

BELLRINGER  Define “land of opportunity”  Provide examples of family or community members who started up small businesses.

A TRADITION OF FREE ENTERPRISE  Why has America been such an economic success?  Open land  Natural resources  Uninterrupted flow of immigrants AND?

FREE ENTERPRISE The social and political commitment to giving people the freedom and flexibility to try out their business ideas and compete in the marketplace

CONSTITUTIONAL PROTECTION Property RightsTaxation  Can’t be taken from an individual except when there is a public reason  Government must pay fair value of property  Applies to businesses, too  Can only tax in ways Constitution allows  Congress can levy taxes  Direct taxes must be apportioned according to population  Guarantees the right to make binding contracts

BASIC PRINCIPLES OF FREE ENTERPRISE  Profit motive: force that encourages people and organizations to improve their natural well-being  Open opportunity: everyone can compete in the market place  Economic rights: legal equality, private property, free contract, voluntary exchange, and competition

ACTIVITY: BUILDING KEY CONCEPTS  Figure 3.1 Features of American Free Enterprise  Page 52  Choose one of these features and give an example from your own daily life.

ROLE OF THE CONSUMER  When consumers buy products, they signal to producers what to produce and how much to make  Also make wishes known by joining interest groups

ROLE OF THE GOVERNMENT  Information and Free Enterprise  Protecting Health, Safety, and Well-Being  Negative Effects of Regulation

ACTIVITY: FOR DOTS!!  Applying Economic Concepts, page 55

SECTION ASSESSMENT 1. Section 1 Assessment, pg Economic Profile: Alice Rivlin, pg. 56

BELLRINGER  Brainstorm a list of tasks performed by librarians  Prepare to compare/contrast this job with the job of a government economist.

TRACKING BUSINESS CYCLES MacroeconomicsMicroeconomics  Study of the behavior and decision making of entire economies  Study of the economic behavior and decision making of small units (individuals, families, households, business)

ACTIVITY: KNOW THE DIFFERENCE! (COMPARE/CONTRAST) MacroeconomicsMicroeconomics  How the banking system operates throughout the U.S.  How an individual bank tries to make a profit by receiving deposits and making loans

TRACKING BUSINESS CYCLES How is economic well- being measured? What’s a BUSINESS CYCLE?  Gross Domestic Product (GDP)  Total value of all final goods and services produced in an economy  Period of macroeconomic expansion followed by a period of contraction, or decline.

PROMOTING ECONOMIC GROWTH EmploymentGrowth  unemployment rate between 4% and 6% desirable  each generation should do better  measured by GDP

PROMOTING ECONOMIC GROWTH StabilityEconomic Citizenship  Gives consumers, producers, and investors confidence in the economy  Indicator #1: price levels  Indicator #2: Health of financial institutions  Do you expect your generation to have a higher standard of living than that of past generations?  DO YOUR PART! GET AN UNDERSTANDING OF MACROECONOMIC PROCESSES THAT SHAPE OUR FUTURES!

TECHNOLOGY AND PRODUCTIVITY Technological ProgressThe Government’s Role  Process used to produce a good or service  Improvements allow an economy to produce more output form same or smaller quantity of inputs, or resources  Morrill Acts of 1862 and 1890?  Land-grant schools (MIT, Texas A&M)?  NASA?  U.S. Patents?

ACTIVITY... BACK TO BELLRINGER Compare and contrast the job of a librarian to the job of a government economist.

SECTION 2 ASSESSMENT  Key Terms and Main Ideas, page 60, 1-6  Skills for Life: Analyzing Primary Sources, page 61, 1-3

BELLRINGER  Recall seeing a young child being asked to share something with another child. Did the child share willingly and fairly without the help of the parent?

PROVIDING PUBLIC GOODS  A shared good or service for which it would be inefficient or impractical (1) to make consumers pay individually and (2) to exclude nonpayers

COSTS & BENEFITS... FREE-RIDER PROBLEM  Benefit <cost that each would pay if provided privately  Societal benefits> total cost (contribution)  Public goods financed by public sector  Private sector would have little incentive to produce public goods  Free riders don’t pay, but still benefit

MARKET FAILURES  Situation in which the market does not distribute resources efficiently

EXTERNALITIES  An economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume.  Video: Externalities Video: Externalities

EXTERNALITIES... Positive ExternalitiesNegative Externalities  Benefits too many people (not just those who paid for it)  Buying/updating an eyesore...  Generate unintended costs  Paper mill wastes pollute river, need to buy water- treatment

ACTIVITY – FOR DOTS!  Key Terms and Main Ideas, page 66, 1-3

ASSESSMENT  Decision Making on Page 66 (#6)  Answer in paragraph form

BELLRINGER What is your personal definition of poverty?

PROVIDING A SAFETY NET  Outline pages  You have 10 minutes.

VIDEO: U.S. POVERTY  U.S. POVERTY (TAVIS SMILEY & DR. CORNEL WEST) U.S. POVERTY (TAVIS SMILEY & DR. CORNEL WEST  Record 15 salient points from the video

SECTION 4 ASSESSMENT  Key Terms and Main Ideas, pg. 70, 1-4

CHAPTER 3 EXAM For: Chapter 3 Self-Test Visit: PHSchool.com Web Code: mna-1031 Print & Submit