Today’s Warm Up Answer on your warm up/exit ticket sheet (additional sheets are by the turn-in tray if needed) How do you think the U.S. Constitution compares to North Korea’s?

American Free Enterprise Today’s LEQ: How do governments in market economies support the characteristics of markets? American Free Enterprise

Main Idea A key factor in America’s economic success is our tradition of free enterprise – the freedom & flexibility to try out business ideas and compete in the marketplace The Constitution guarantees important economic rights

Features of Free Enterprise The Constitution helps to guarantee: Profit Motive Open Opportunity Legal Equality Private Property Rights Free Contract Voluntary Exchange Competition

Profit Motive Our gov’t does not control business activities – business owners and managers make their own choices They operate in ways they believe will maximize their profits & are responsible for their own economic success or failure

Open Opportunity We have legal equality & everyone can compete in the marketplace This maximizes a country’s use of its human capital Economic mobility is possible, BUT equal opportunity does not mean equal outcome!

Property Rights Our constitution protects private property rights – people can control their possessions as they wish Gov’t can only take land away when there is a public reason and must pay the person fair value No person shall “be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use without just compensation.”

Contracts The right of free contract allows people to decide what agreements they want to enter into The Constitution guarantees people and businesses the right to make binding contracts – no laws can be passed to change the terms of someone’s business agreement Article I, Section 10 prohibits states from passing any “Law impairing the Obligation of Contracts.”

Allows people to decide what and when they want to buy and sell Voluntary Exchange Allows people to decide what and when they want to buy and sell

Competition Because of all these rights, we have extensive competition This helps to lower prices and increase the quality and variety of g/s

Taxation The Constitution also outlines basic rules for gov’t’s taxation of indl’s & businesses 16th Amendment gave Congress clear right to set taxes based on income

Today’s Exit Ticket In what ways do the benefits of free enterprise affect your daily life? List as many examples as you can. Consider neighborhood businesses, jobs you’ve held, and other ways in which you benefit from our nation’s prosperity.