1. Free Enterprise System
Encourages individuals to start and operate their own businesses without government involvement.

2. Basic Principles of the Free Enterprise System
Freedom to own personal property and do with it whatever we choose
Cars, computers, land, homes
Start and operate the business of your choice
The government allows you to run your business however you see fit and without interference

3. Competition The struggle between companies for customers
The government will not compete against you.
Why does the government want us to open new businesses? How does this improve our economy?

4. Two types of competition
Price Competition
The business focuses on the sale price of the product.
The assumption is that with all other factors being equal, customers will purchase the item with the lowest price.

5. Non-price competition
Businesses choose to compete on the basis of factors that are not related to price.
Factors include:
Quality of the products
Service and financing
Business location
Reputation

6. MONOPOLY – It’s illegal!!!
No, not the board game!!!
The exclusive control over a product or the means of producing it.
Examples: AT&T Microsoft

7. Risk is defined as the potential for loss or failure in relation to the potential for improved earnings.
Whenever individuals choose to operate their own business, they run the risk of losing (or gaining) all that they invest. As the potential for earnings gets greater, the risk increases accordingly.

8. Profit
The money earned from conducting business after all costs and expenses have been paid.
If you sell a coke for $1.09 your profit is not $1.09, you must first deduct the amount the store paid to stock the drinks and a percentage for overhead.

9. What is an economy?
An economy is defined as….the way a nation makes its economic choices.
What exactly does that mean??
Just think MONEY!!! How does our money move through the economy? What do we do to keep it moving through the economy?

10. How does the government get money?
Did you say taxes? Yes, they get money through our tax dollars.
If we are paying in so much money, what do we get in return?
The answer to these questions can be answered by learning the roles of government in our economy.

11. The Role of Government
The Government plays four roles in our Free Enterprise System
They are:
Provider of Services
Supporter of Business
Regulator
Competitor

12. Provider of Services What services does the government provide?
Roads, bridges, free education, public libraries, military, fire department, police, Medicare, Medicaid, WIC, and sanitation centers.

13. Supporter of Businesses
Disaster Assistance
SBA – Small Business Administration
All government purchased items must be purchased from US companies
The government is the single largest consumer of goods and services in the US
Tariffs and trade agreements

14. Regulator Making laws is one of the principal functions of government.
In the US, most laws are made to protect the safety, health, and welfare of individuals and the freedom of businesses to operate in our free enterprise system.

15. Regulators – Consumer & Worker Protection
Agencies that are specifically set-up to protect the individuals while they are at work and to protect the consumer when purchasing products.

16. Consumer & Worker Protection
FDA – Food & Drug Administration (proper labeling of food & drugs, lack of contaminents, research into new drugs and their benefits)
EEOC – Equal Employment Opportunity Commission
OSHA – Occupational Safety and Health Administration
CPSC – Consumer Product & Safety Commission
FEMA – Federal Emergency Management Agency
DEA – Drug Enforcement Agency
EPA – Environmental Protection Agency
FDIC – Federal Deposit Insurance Corporation
FTC – Federal Trade Commission (truth in advertising, labeling, monopolies)
Licensing
Minimum Wage

17. Regulators – Business Protection
Patents
Copyrights
Trademarks
Licensing Agreements
Sherman Antitrust Act (1890)
Clayton Antitrust Act (1914)
Predatory Pricing, Monopolies, FTC

18. Competitor Agencies operated by government that competes with private enterprise
TVA
USPS
Amtrak
Parks and Campgrounds

19. The Role of the Consumer
Supply
Demand
Shortage
Surplus
Equilibrium

20. Supply The amount of goods producers are willing to make and sell.
As prices rise, producers are willing to produce more.
As prices go down, producers are willing to produce less

21. Demand Consumer willingness and ability to buy products
As price goes up, consumers are not as willing to buy.
As price goes down, consumers are willing to buy more.

22. Surplus & Shortage Surpluses occur when supply exceeds demand.
If prices are too high or quality not good
Shortages occur when demand exceeds supply.
Think GASOLINE!!! We pay whatever they charge because we have to have it

23. EQUILIBRIUM
When the amount of product being supplied is equal to the amount being demanded, equilibrium occurs.
Customers are able to purchase products at a fair price and businesses are able to maintain a steady flow of business.

25. Federal Reserve System
Great Depression
When? Why?
Federal Reserve System
Who are they?
What do they do?
Interest rates
How do interest rates affect the economy?