Goals: Free enterprise – The students will 1. Research in the library for the first half of class. 2. Understand the concepts of profit and loss in a free enterprise economy. 3. Understand an ethical free enterprise economy. 4. Recognize the rights and responsibilities in a free enterprise economy.

 Definition: The amount of money left over after all the costs of production have been paid. ◦ Profit exists whenever total revenue is greater than total cost. ◦ Total Revenue=Price X Number of goods sold ◦ Total Cost = Average cost of good X Number sold

 What do profits and losses signal? ◦ Signals to firms actually earning the profits that things are good. ◦ Signals to firms standing on the sidelines where money can be made.  Use NBC, ABC, and CBS example

 Ethics is what? ◦ Definition – consists of the principles of conduct, such as right and wrong, morality and immorality, good and bad.  What are the characteristics or qualities a free enterprise economy needs to be an ethical system?

1. Allows individuals to choose their own occupations or professions. 2. Produces goods and services preferred by both the majority and minority. 3. Rewards or punishes producers based on how well or poorly they respond to the buying public. 4. Supports the right of the individual to be free, including the freedom to acquire property, work where they choose, and start your own business.

 How are these ethical principles and free enterprise protected in the US? In other words, from where do these key freedoms come? ◦ Bill of Rights ◦ Declaration of Independence ◦ The Constitution

 Open disclosure about what is being exchanged – accurate information on goods, services being exchanged.  Obeying the law – this is the responsibility to use one’s property for legal purposes.  Being truthful – the right to compete in a free enterprise system requires that individuals compete in a truthful, legitimate manner.