1. Free Enterprise

2. Free Enterprise – Basic Principles
An economic system based on limited Government intervention.
BASIC PRINCIPLES:
Freedom of Ownership
Competition
Risk
Profit

3. Free Enterprise
FREEDOM OF OWNERSHIP

4. Freedom of Ownership Individuals Businesses
We can own property / goods
We can choose what property we buy
We can choose what we do with property
We can own business (keep money)
Businesses
Businesses can sell what they want
Businesses can sell for what they want

5. Free Enterprise
COMPETITION

6. Competition Essential part of Free Enterprise !! WHY? Motivation:
Companies make better products / cheaper
Individuals work harder / improve

7. Competition Two ways businesses compete: Price Competition
Non-Price Competition

8. Competition Price Competition
All other things being equal, customers will buy the lowest price.
Wal-Mart:
“Always the lowest price – always”

9. Competition Non-Price Competition Quality of Products - Rolex
Features of Products - Whopper
Service and Financing - Wallside
Business Location Eleven
Reputation - Coca-Cola

10. Competition
Monopoly
- One firm controls the market for a given product.
- NO COMPETITION -
Why is it Bad?
Can control price
Can control choice, quality, who get it

11. Free Enterprise
ASSIGNMENT

12. Non-Price Drawing
Consider as many non-price factors as possible that McDonalds’s uses to compete
(Minimum five factors)
20 points
Illustrate each factor on construction paper
List the factors on the back of the drawing or incorporated in drawing.

13. Free Enterprise
RISK

14. Risk the potential for loss or failure.
Necessary hazard of Free Enterprise.
Risk involved with:
Personal investment (products / money)
New Business
New products / technology (high cost)

15. Elected President of United States – Age 51
Who am I ?
Ran for Speaker - Lost – Age 29
Failed in Business – Age 22
Elected to Congress – Age 37
Ran for Vice President - Lost – Age 47
Failed in Business AGAIN – Age 24
Girlfriend Dies – Age 26
Ran for Congress - Lost – Age 34
Ran for Senate AGAIN - Lost – Age 49
Elected to Legislature – Age 25
Ran for Senate - Lost – Age 46
Ran for Legislator - Lost – Age 23
Ran for Elector - Lost – Age 31
Has Nervous Breakdown – Age 27
Ran for Re-election - Lost – Age 39
Elected President of United States – Age 51

16. Free Enterprise
PROFIT

17. Profit
Money earned from business AFTER all costs and expenses are paid.
Is the incentive for people to take risk.
THE DRIVING FORCE OF FREE ENTERPRISE

18. Economic Cost of Unprofitable Firms
In groups of 3 or 4:
Brainstorm all the potential ECONOMIC COSTS you can think of if a firm is unprofitable.
(What bad things can happen?)
3 minutes

19. Profit Economic COST of unprofitable firms: Lay-offs
Investors lose money
Research cutbacks (technology)
Purchases get cut back (suppliers suffer)
Government suffers (less taxes)

20. Economic Cost of Unprofitable Firms
In groups of 3 or 4:
Brainstorm all the potential ECONOMIC BENEFITS you can think of if a firm is profitable.
(What good things can happen?)
3 minutes

21. Profit Economic BENEFIT to successful firms.
Hire More People / Higher Pay
Investors make money
New Technology
Government makes more (taxes)
Give to Charities
Attract Competition (Beneficial to customer)

22. Free Enterprise
ASSIGNMENT

23. Current Event Find article relating to Free Enterprise
100 word response
Describe why the article relates
Article showing U.S. inhibiting Free Enterprise
Describe why the event is inhibiting Free Enterprise