1. Capitalism

2. A market economy is normally based on a system of capitalism, where private citizens, many of whom are entrepreneurs, own the factors of production
In a free enterprise system, another term used to describe the American economy, competition is allowed to flourish with a minimum amount of government intervention

3. Private Property Rights
There are five important characteristics in a free enterprise system:
Economic Freedom
Voluntary Exchange
Private Property Rights
Profit Motive
Competition

4. People have the freedom to choose their jobs and their employer!
Economic Freedom
People have the freedom to choose their jobs and their employer!

5. Economic Freedom
Businesses are free to hire the best workers, and they have the freedom to produce the goods and services they feel will be most profitable (and they are free to risk failure)

6. Both the buyers and sellers are better off after the exchange
Voluntary Exchange
The act of buyers and sellers freely and willingly engaging in market transactions
Both the buyers and sellers are better off after the exchange

7. Sellers have the opportunity to sell their product
Voluntary Exchange
Sellers have the opportunity to sell their product
Both the buyer and seller obtained something they believed had more value than the money or products they gave up

8. Private Property Rights
The privilege that entitles people to own and control their possessions as they wish
Can be tangible items
Can be skills and talents (intangible items)

9. Profit Motive
People are free to risk their savings or any part of their wealth in a business venture
Profit is the extent to which persons or organizations are better off at the end of a period than they were at the beginning

10. Buyers compete to find the best products at the lowest prices
Competition
Competition is the struggle among sellers to attract consumers while lowering costs
Buyers compete to find the best products at the lowest prices

11. Provider of Goods and Services Promoter of National Goals
The Role of Government
Government – whether national, state, or local – has an economic role to play that reflects desires, goals, and aspirations of its citizens
Americans want its involvement!
Protector
Provider of Goods and Services
Consumer
Regulator
Promoter of National Goals

12. Protector The US government enforces laws such as:
Laws against false and misleading ads
Unsafe food and drugs
Environmental hazards
Unsafe automobiles
Work discrimination
Ensures that everyone follows ‘the rules of the game’

13. Provider and Consumer
All levels of government provide goods and services for citizens:
Supplies defense services
Education and public welfare
Maintenance of parks, libraries, and transportation

14. Provider and Consumer
In the process of providing, government consumes factors of production just like any other business:
Largest consuming unit except for the consumer sector

15. Regulator
Government charged with preserving competition in the marketplace
Oversees interstate commerce and communication
Oversees entire industries such as banking and nuclear power
Building and zoning permits
Regulate insurance rates and automobile registrations

16. Promoter of National Goals
“Many government functions reflect people’s desire to modify the economic system to achieve the economic goals of freedom, efficiency, equity, security, full employment, price stability, and economic growth”
Social security
Child labor
Minimum wage

17. United States’ Economy
Because of these modifications, and because there are some elements of tradition in our economy:
The United States is said to have a mixed economy or modified private enterprise economy
people are subject to some government regulation and intervention