American Free Enterprise: The Benefits of Free Enterprise

American Free Enterprise and its Principles Free enterprise  an economic system in which individuals (not government) own most, if not all, the resources and control their use Profit motive  the force that encourages people and organizations – It rewards innovation – It improves productivity by allowing more efficient companies to make money

Open Opportunity and Economic Rights Open opportunity  everyone can – Allows for economic mobility up and down: no matter how much you start out with

Open Opportunity and Economic Rights Legal Equality  everyone has – This maximizes a country’s use of Private property rights  people have the right

Economic Rights and Consumers Free contract  allows people to decide Consumers are important because they signal producers what Interest groups  organization that tries to persuade

Role of Government Make sure that producers provide consumers Public disclosure laws  laws requiring companies to provide full Federal and state agencies are set up to regulate industries whose goods and

Role of Government: Regulation Although the government does not directly get involved in running private businesses, Consumer protection regulation the government sets: 1. Manufacturing 2. Requires that drugs be

Negative Effects of Regulation Some rules businesses have to put in place can: – Be costly to implement – Cut into profits Regulations can Regulations cause the government to spend more