Chapter 2: Free Enterprise in the United States

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Presentation transcript:

Chapter 2: Free Enterprise in the United States

How It Works… We have a MIXED-MARKET Economy, and it is run by a FREE ENTERPRISE SYSTEM What is a FREE ENTERPRISE SYSTEM? People are free to make their own choices and the government only intervenes when necessary.

What is a Pillar? Pillars support our free enterprise system…There are six total but three of those we will discuss today: Private Property Specialization Voluntary Exchange Price System Market Competition Entrepreneurship

Private Property The desire to take care of, make decisions for, and produce income from your own personal property!

Price System Prices act as messengers. Prices communicate to businesses how will customers are to produce the product. Second, prices provide strong incentives to businesses and consumers Rising Prices=Increase in Production------Increase in Prices=Consumers Looking for Bargains (Vice Versa)

Market Competition Competition in Resource Markets Fighting over who gets what resources Competition in Markets for Products Buyers competing with Buyers Sellers competing with Sellers Competition in Life With school mates, in career choices, etc.

Circular Flow of Money Households—1. Buy the goods and services and 2. also own resources (ex. Labor) Households exchange their services such as labor in order to receive wages/income to buy the goods needed

Functions of Money Medium of Exchange—EVERYONE wants money; easy to exchange goods and services because money is a happy medium Store of Value—Easy to hold on to and use in the future; you can place in a bank or pockets; doesn’t lose value! Measure of Value—when used in an exchange, each product or resource has a single money price; able to compare prices to find the best value!

Goals of Our Economic System Full Employment Economic Growth Price Stability Economic Freedom Economic Security Economic Equity Efficiency

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