1. Define these terms from Public Transfer Payment
Warm Up #12
Define these terms from
Chap. 3:
Market Failure
Public Goods
Externality
Negative Externality
Positive Externality
Subsidy
Transfer Payment
Public Transfer Payment

2. SSEF5 a The students will describe the roles of government in a market economy. a. You will be able to explain why government provides public goods and services, redistributes income, protects property rights, and resolve market failures.
Determine and define vocabulary. Identify key terms within the standard. Define each term.
________________________________________

3. The American Free Enterprise System and the Role of the Government
SSEF5
The students will describe the roles of government in a market economy.

4. What is a Free Enterprise System?
EXAMPLE: United States
Business people free to start business, choose how to use resources
Managers and workers choose where to exchange labor for pay
Consumers choose which goods and services to buy
Zalia Cosmetics—2001 startup aimed at underserved Latina market
Government protects or encourages competition, enforces contracts

5. What happens when businesses (firms) do not provide goods or services that the American people want?
The Federal, State or Local Governments provide those services.

6. 1. Provide Public Goods and Services
Government and Free Enterprise
1. Provide Public Goods and Services
KEY CONCEPTS
Public sector—branches of government that make production decisions
Market failure—outsiders benefit from or pay for marketplace interaction
Public goods—products provided by the government, but consumed by the public
Public goods are funded with taxes

7. Government and Free Enterprise
2. Redistributes Income
KEY CONCEPTS
Safety Net
Government programs designed to protect people from economic hardships (old/sick)
Public transfer payments (combats the issue of poverty)
Is a payment in which the government transfers income from taxpayers to recipients who do not provide anything in return.
See figure 3.8, P. 89

9. 3. Protects Property Rights
Government and Free Enterprise
3. Protects Property Rights
KEY CONCEPTS
The rights of individuals and groups to own businesses and resources.

10. 4. Resolve Market Failures
Government and Free Enterprise
4. Resolve Market Failures
KEY CONCEPTS
Market failure—outsiders benefit from or pay for marketplace interaction
Public goods—products provided by government, consumed by public
Public goods funded with taxes

11. Managing Externalities
KEY CONCEPTS
Market failure occurs when economic transactions cause externalities
Externality—side effect on someone other than producer or buyer
negative externality—people uninvolved in the transaction pay costs
positive externality benefits people uninvolved in transaction

12. Think Pair Share What are some more examples of market failures?
Industrial Pollution
Second Hand Smoke
Dam

13. Show What You Know! GEORGIA MILESTONE QUESTIONS
Which of the following is Free Enterprise MOST connected with?
Expenses
Consumers
Producers
Consumer sovereignty

14. Show What You Know! GEORGIA MILESTONE QUESTIONS
Public goods are funded by
charitable donations collected by the government
profits made by private businesses
profits made by public companies
taxes collected by the government

15. Show What You Know! GEORGIA MILESTONE QUESTIONS
A person who chooses not to pay for a good or service but benefits from it when it is provided is called a(n)
free consumer
free rider
investment risk
subsidy risk

16. Show What You Know! GEORGIA MILESTONE QUESTIONS
Government programs that protect people from economic hardship are called a
free rider
positive externality
safety net
public subsidy

17. Show What You Know! GEORGIA MILESTONE QUESTIONS
A positive externality occurs when people who are not part of a marketplace interaction
are not affected by it
make no profit from it
benefit from it
pay all of the costs of it

18. Paying for Pollution Do page 87 Analyze Graphs 1 & 2
Closure Activity #8
Paying for Pollution Do page 87 Analyze Graphs 1 & 2

19. The End.
Any Questions?

20. Definitions and Test Tomorrow.
Capitalism Public Goods Externality Negative Externality Positive Externality Subsidy Transfer Payment Standard of living Specialization
Free Rider
Public Sector
Redistribute Income
Taxes
Consumer sovereignty
Profit
Free contract
Safety net
Market failure
Profit motive