1. EPF 2: The student will demonstrate knowledge of the role of producers and consumers in a free enterprise or market economy

2. Google Classroom Pre-Test
EPF 2: The student will demonstrate knowledge of the role of producers and consumers in a free enterprise or market economy
Google Classroom Pre-Test

3. EPF 2:. The student will demonstrate knowledge
EPF 2: The student will demonstrate knowledge of the role of producers and consumers in a free enterprise or market economy

4. OBJECTIVE
Be able to describe the most important facets of a “Free Enterprise System”

5. Free Enterprise Freedom of Choice Open Mkt. (S & D) The Profit Motive
Competition
Limit Gov. Control
Free
Enterprise

6. OBJECTIVE
Be able to identify the freedoms generally allowed in a free enterprise system

7. OBJECTIVE What Are They?
Be able to identify the freedoms generally allowed in a free enterprise system
What Are They?

8. Freedom of Choice When to Buy When to Sell To Make Profit To Compete
To Own
Freedom to Decide

9. Freedom of Choice
Or simply put

10. Freedom of Choice
Or simply put
To be an Entrepreneur !!!

11. Seed Question Freedom of Choice
How would you react or feel if you lived in a country that did not provide for these freedoms?

12. Seed Question Freedom of Choice
How would you react or feel if you lived in a country that did not provide for these freedoms?
When to Buy
When to Sell
To Make Profit
To Compete
To Own
Freedom to Decide

13. OBJECTIVE Be able to describe the open market using the concepts of
“Supply & Demand”

15. Define Supply & Demand Demand: Supply
The ability & desire of customers to own products
Supply
Products/Services available for sale

16. Describe the Laws of Supply & Demand
Price Laws of Demand:
The price law of demand says that as the price of a good rises, the demand will go down, and vice versa.
Price Laws of Supply
The price law of supply states that as the price rises, the amount of a good supplied rises, and vice versa.

17. Describe the Laws of Supply & Demand
Quantity Laws of Demand:
If the quantity of a good demanded falls, the price will fall, and vice versa.
Quantity Laws of Supply
If the quantity of a good supplied rises, the price falls, and vice versa.

18. Describe the Laws of Supply & Demand
Quantity Laws of Demand:
If the quantity of a good demanded falls, the price will fall, and vice versa.
Quantity Laws of Supply
If the quantity of a good supplied rises, the price falls, and vice versa.
See Handout

19. Describe the Laws of Supply & Demand
Equilibrium
The point at which the amount demanded is equal to the amount supplied meaning that there is no wasted product.

20. Describe the Laws of Supply & Demand
Equilibrium
The point at which the amount demanded is equal to the amount supplied meaning that there is no wasted product.
More on This in the Pricing Unit

21. Describe the Laws of Supply & Demand
Supply & Demand Exercise

22. Seed Question
Describe some products that you’ve seen respond to the Laws of Supply & Demand
(Besides Gasoline)

23. OBJECTIVE
Be able to define the following terms associated with the concept of PROFIT:
- Income,
- Expenses,
- Costs,
- Gross Profit,
- Net Profit, &
- Risk

24. Profit = Incentive
Income - the amount of money a business receives from the sales of its goods/services Cost - The amount of money a company spends to get product into the store Expenses - The amount of money a company spends on the operation of the business

25. Profit = Incentive
Gross Profit - Amount of money made after the cost of goods is subtracted (Income - Cost) Net Profit - The amount of money made after the cost of goods & expenses are subtracted out (Income - Cost - Expenses) Risk - The “gamble” a business or person takes that they might lose something instead of being rewarded

26. Point to Remember

27. Point to Remember Profit is Good

28. Profit is Good
Seed
Question
Why is it good?

29. Profit is Good Seed Question
Answer: Motivation, Incentive, Drive, Goals, etc.

30. What are some examples of economics incentives?
Profit is Good
Seed
Question
What are some examples of economics incentives?

31. Profit is Good Seed Question
Answer: Income, Profit, Interest Income, Investment Income, etc..

32. What Do We Risk Losing? Our own money
The money of other people (friends, relatives, banks, etc.)
Our time & energy that we could spend on a career
Our hopes/dreams (self esteem, inheritance, freedom, etc.)

33. Be able to discuss ways a business can increase its profits
OBJECTIVE
Be able to discuss ways a business can increase its profits

34. Be able to discuss ways a business can increase its profits
OBJECTIVE
Be able to discuss ways a business can increase its profits
Because “Profit is Good”

35. Be able to discuss ways a business can increase its profits
OBJECTIVE
Be able to discuss ways a business can increase its profits
Common Sense: How would you increase profits?

36. Increasing Profits Raise Prices Increase Sales Increase Efficiency
Boost Productivity

37. Increasing Profits Raise Prices ????????? Increase Sales
Increase Efficiency
Boost Productivity

38. “Return on Investment”
Increasing Profits
It’s Called
R O I
“Return on Investment”
Raise Prices ?
Increase Sales
Increase Efficiency
Boost Productivity

39. 4th Trait of Free Enterprise

40. OBJECTIVE
Be able to discuss in a short answer question the advantages to competition in our economy

41. Competition
A rivalry between two or more companies to attract scarce (limited) customer dollars
Market Share - A company’s part of the total market for a product
35%

42. How to Compete
Lower prices of course.

43. How to Competition
Prices of course, but how else might I compete with another business?

44. How to Competition Lower Prices Better Quality Products
Better Customer Service
More Convenience
More Variety of Products
Better Marketing

45. Benefits of Competition
New Products & Services
Variety of Products/ Services
Lower Prices
Better Customer Service
Higher Quality Merchandise
More Information Provided
Etc.

46. OBJECTIVE
Be able to identify the consequences of a lack of competition in our economy

47. Consequences of No Competition (Also Called Colluding or Price Fixing)
Prices will go up
Innovation will slow
Service might suffer
Quality might suffer

48. Consequences of No Competition (Also Called Colluding or Price Fixing)
Prices will go up
Innovation will slow
Service might suffer
Quality might suffer
And some experts believe it takes only 35% of market control to influence prices in a market

49. Be able to describe the role of government in a Free Enterprise system
OBJECTIVE
Be able to describe the role of government in a Free Enterprise system

50. Be able to describe the role of government in a Free Enterprise system
OBJECTIVE
Be able to describe the role of government in a Free Enterprise system
The role of government in a Free Enterprise economy is limited

51. Be able to describe the role of government in a Free Enterprise system
OBJECTIVE
Be able to describe the role of government in a Free Enterprise system
The role of government in a Free Enterprise economy is limited
Primarily, the role of government is to protect competition
But we’ll talk more about that in EPF 8

52. Free Enterprise in the USA REVIEW
Freedom of Choice
Open Mkt. (S & D)
The Profit Motive
Competition
Limit Gov. Control
Free
Enterprise

53. Be able to define the term Producers or “Businesses”
OBJECTIVE
Be able to define the term Producers or “Businesses”

54. Be able to define the term “Business”
OBJECTIVE
Be able to define the term
“Business”

55. “Business” OBJECTIVE Be able to define the term
Unscramble the Definition on Quizlet Scatter

56. “Business”
An activity that satisfies economic needs by planning, organizing, & controlling resources to produce & market goods & services

57. Business An activity . . . Something done
that satisfies Makes someone happy
economic wants & needs Has monetary value
by planning, Developing a process
organizing, Getting resources in order
& controlling Directed by management
resources Factors of production
to produce Create, improve upon, change
& market Moving goods to consumers
goods & services. Products or things done for others

58. Business Activity
For the businesses listed below, explain how each meets the definition of business:
McDonald’s
Nichols Hardware
Google
(Your Choice)
An activity . . .
that satisfies . . .
economic wants & needs
by planning,
organizing,
& controlling . . .
resources . . .
to produce . . .
& market . . .
goods & services.

59. OBJECTIVE
Be able to describe the three major types of business ownership & discuss their advantages & disadvantages

60. SOLE PROPRIETORSHIP
Owned & operated by one person (Usually highly skilled)
employs large % of the workforce
examples include plumbers, dentists, beauticians, small shop owners, etc.

61. PARTNERSHIP
Two or more people legally agree to share the ownership & responsibilities of a business

62. CORPORATION
A charted (legal) entity that operates apart from the owners
the corporation will often sell stock
the stockholders will elect a board of directors to run the company

63. CORPORATIONS (Discussion)
Doctors will often incorporate their practice; Why?
(Discussion)

64. SOLE PROPRIETORSHIP PARTNERSHIPS CORPORATIONS ACTIVITY: Identify three advantages & disadvantages of each
Advantages 1. 2. 3.
Disadvantages 1. 2. 3.

65. SOLE PROPRIETORSHIP Disadvantages Advantages capital ($) is limited
can’t have “group-think”
no help available w/ other skills
big Risk
Advantages
easy to start
decisions are easy to make
low taxes
fewer gov. regulations
you get all the money!!

66. PARTNERSHIPS Advantages Disadvantages
more ideas & opinions to consider
you have help to run the business
the risk is shared
more capital available
Disadvantages
more ideas & opinions to consider (?)
harder to make decisions
personally at risk
death of a partner causes problems

67. CORPORATIONS Advantages Disadvantages
liability is limited to your investment
it is easy to raise more capital (sell more stock)
it is easy to get into & out of the corporation (sell or buy stock)
Disadvantages
often a complex & changing ownership picture making decisions difficult
highly regulated
higher tax rates

68. OTHER FORMS OF BUSINESS OWNERSHIP
Franchise:
a legal agreement to operate a business in the name of a recognized company.
Advantages Disadvantages
Franchisor offers help Expensive to buy
Planning already done Limited creativity

69. OTHER FORMS OF BUSINESS OWNERSHIP
Franchise:
a legal agreement to operate a business in the name of a recognized company.
(Franchisee must follow Franchiser’s Guidelines regarding business name, slogans, prices, products, etc.)
Advantages Disadvantages
Franchisor offers help Expensive to buy
Planning already done Limited creativity

70. OTHER FORMS OF BUSINESS OWNERSHIP
Cooperative:
A company owned by the customers of that company.
Advantages Disadvantages
Customer Support Frequent Ownership Changes
Positive Image Disputes Among the Owners
Loyal Customers

71. Complete the EPF Quizlet #2
HOMEWORK
Complete the EPF Quizlet #2

72. STUDY
Complete the EPF 2 Quiz

73. And Bring Some Cash to Class Next Time
STUDY
Complete the EPF 2 Quiz
And Bring Some Cash to Class Next Time