1. Economic Questions, Freedoms, & Social Goals

2.  Lived in Scotland from 1723-1790  Wrote The Wealth of Nations  Believed in Laissez Faire Economics  The government should not control the economy  It will natural work itself  Profit Incentive: Business will produce what they know people need and want so that they can make a profit Hands OFF!!!!!! Father of Capitalism Or Modern Economics

3. Who should produce what? What and how much should be produced?  Choice of career/job  Which business?  Example: Farmer Fred or Framer Sally?  We don’t know  They decide  Because of scarcity and tradeoffs if you produce more of one thing you will have to produce less of another  Wheat or tomatoes?  10 acres of wheat and 5 acres of tomatoes?  We don’t know  They decide OR

4. How should goods and services be produced? Who should share in what is produced?  Decide by what will cost the least but give the best outcome  Hire workers? Buy a tractor?  Tractor may be more expensive at first but will produce more faster  Maybe the better choice  How the goods and services are distributed in society  Who gets the goods and services? Who profits?  The farmers (profit), the consumers (get goods), the workers (pay) OR

5.  How income is distributed or shared among a nation’s population  Who gets what or who has what

6.  The type of economic system you live in determines the answers to these questions!!!

8. TraditionalMarket  Things are the way they have always been  Based on traditions, beliefs, customs, or religion  If dad was a farmer you will be a framer  Where? Native American or African tribes  Capitalist  Individual owns and controls the factors of production  No government interference  More individual economic freedoms  Individual answers the economic questions  Market: the activity that happens between buyers and sellers  Buyers agree to purchase a good or service and sellers agree to sell it at a certain price

9. CommandMixed  Controlled  Government controls the factors of production  There are little to no personal economic freedoms  Government controls what is produced and who produces it-It answers the economic questions  The economy has characteristics of two or more of the types of systems  Example: U.S. is mixed  Market: Freedom to own business  Command: There are laws like labor laws, minimum wage, etc. so some government control

10. Six Economic Freedoms in the American Economy

11.  You choose how to spend your money and what to buy  Buyers control what is produced  A business chooses what they sell according to what the buyer needs and wants  We have a great deal of variety

12.  Sellers rival to sell similar products at lowest cost or best quality  Free Competition: system in which businesses compete for customers  Compete with price and quality

13.  You choose your career  You can find a better job for better pay  You can ask for better pay or benefits  You can get an education of your choice

14.  Profit: money left after you pay for all costs of producing the goods and services  Example:  Profit Incentive: Desire to make a profit so will produce what consumers want and need  Invest: put money into a business

15.  Copyright: License to written work (films, music, books)  Patent: license to produce an invention for a period of time  Private Property: owned by individual or group, not the government  But government can have its own private property  You have the right to own land, a business, home, forms of capital, etc.

16.  Freedom to own and run a business the way you want  Freedom to own and control the factors of production  Free Enterprise System: system in which there are few limits to business ownership or activities

17.  In the U.S. the role of government is limited  Except in times of national security, to keep peace, or emergency  Over time the role has increased  Examples: Regulate Prices Labor Laws