THE AMERICAN FREE ENTERPRISE SYSTEM Dr. T. D. Mitchell
Bonneville High School Idaho Falls, Idaho Economics: concepts and
choices, 2011. Holt McDougal
Slide 2
ADVANTAGES OF THE FREE ENTERPRISE SYSTEM Objectives in this
section: Objectives in this section: Explain why the Unites States
is considered to have a capitalist or free enterprise system.
Explain why the Unites States is considered to have a capitalist or
free enterprise system. Identify the legal rights that safeguard
the free enterprise system. Identify the legal rights that
safeguard the free enterprise system. Analyze how the profit motive
and competition help to make the free enterprise system work.
Analyze how the profit motive and competition help to make the free
enterprise system work. Economics: concepts and choices, 2011. Holt
McDougal
Slide 3
THE AMERICAN FREE ENTERPRISE SYSTEM Concept Review Concept
Review A market economy is and economic system based on individual
choice, voluntary exchange, and the private ownership of resources.
A market economy is and economic system based on individual choice,
voluntary exchange, and the private ownership of resources. Key
Concept Key Concept Free enterprise is another name for capitalism,
and economic system based on private ownership of productive
resources. This name is sometimes used because in a capitalist
system anyone is free to start a business or enterprise. Free
enterprise is another name for capitalism, and economic system
based on private ownership of productive resources. This name is
sometimes used because in a capitalist system anyone is free to
start a business or enterprise. Economics: concepts and choices,
2011. Holt McDougal
Slide 4
WHAT IS A FREE ENTERPRISE SYSTEM? Business in America Business
in America Choices are the basis of a market economy. Choices are
the basis of a market economy. Business owners can freely choose to
start a business. Business owners can freely choose to start a
business. Managers and workers who operate these businesses
voluntarily decide to exchange their labor for the pay the owners
offer. Managers and workers who operate these businesses
voluntarily decide to exchange their labor for the pay the owners
offer. Consumers freely choose which products to purchase.
Consumers freely choose which products to purchase. Economics:
concepts and choices, 2011. Holt McDougal
Slide 5
EMERGING MARKETS Lets look at the economies of Mexico and
Singapore Lets look at the economies of Mexico and Singapore In
Mexico, government plays a much larger role. In Mexico, government
plays a much larger role. Informal markets have grown up. Informal
markets have grown up. In Singapore, the government is so involved
workers are required to contribute to a national savings account.
In Singapore, the government is so involved workers are required to
contribute to a national savings account. Economics: concepts and
choices, 2011. Holt McDougal
Slide 6
FREE ENTERPRISE AND LEGAL RIGHTS Open Opportunity Legal
Equality Free Contract Economics: concepts and choices, 2011. Holt
McDougal
Slide 7
HOW A FREE ENTERPRISE SYSTEM WORKS Economics: concepts and
choices, 2011. Holt McDougal
Slide 8
MILTON FRIEDMAN: PROMOTER OF FREE MARKETS Spent most of his
career teaching at the University of Chicago. Central to his ideas
was the belief that the market should be free to operate in all
fields. Easing government restrictions would bring more producers
into the market. Governments most important role in the economy is
to control the supply of money. Advised two presidents Winner of
the Nobel Prize. Economics: concepts and choices, 2011. Holt
McDougal
Slide 9
MILTON FRIEDMAN TALKS ABOUT GREED Economics: concepts and
choices, 2011. Holt McDougal
Slide 10
REVIEWING KEY CONCEPTS 1.Explain the difference among the
following terms. Open opportunity Open opportunity Legal equality
Legal equality Free contract Free contract 2.How is a free
enterprise linked to economic freedom? 3.Explain the role of
competition in a free market. Illustrate you answer with examples
of businesses in Idaho Falls. 4.What do you think might be the next
new technology to compete with computers? Economics: concepts and
choices, 2011. Holt McDougal
Slide 11
HOW DOES FREE ENTERPRISE ALLOCATE RESOURCES Objectives in the
section: Objectives in the section: Explain how consumers help
determine the way resources are used. Explain how consumers help
determine the way resources are used. Explain how producers help
determine the way resources are used. Explain how producers help
determine the way resources are used. Analyze a circular flow model
of the U. S. economy. Analyze a circular flow model of the U. S.
economy. Economics: concepts and choices, 2011. Holt McDougal
Slide 12
THE ROLES OF PRODUCERS AND CONSUMERS Producers seek profit.
Producers seek profit. Consumers vote with their wallets. Consumers
vote with their wallets. Economics: concepts and choices, 2011.
Holt McDougal
Slide 13
GOVERNMENT IN THE U. S. ECONOMY Modified free enterprise
(circular flow) Modified free enterprise (circular flow) Located in
the center. Located in the center. A consumer in the product
market. A consumer in the product market. Also a consumer in the
factor market. Also a consumer in the factor market. Government is
a producer. Government is a producer. Economics: concepts and
choices, 2011. Holt McDougal
Slide 14
REVIEW Compare and contrast the role of consumers and producers
in producing resources. Which do you think has the greater power?
Compare and contrast the role of consumers and producers in
producing resources. Which do you think has the greater power? Use
the circular flow diagram on pg. 80 and what you have learned from
this section to explain the ways in which government allocates
resources. Use the circular flow diagram on pg. 80 and what you
have learned from this section to explain the ways in which
government allocates resources. What industries in todays world do
you think would be wise to make changes given consumers
preferences? Give reasons for you selections. What industries in
todays world do you think would be wise to make changes given
consumers preferences? Give reasons for you selections. Economics:
concepts and choices, 2011. Holt McDougal
Slide 15
GOVERNMENT AND FREE ENTERPRISE Objectives in the section:
Objectives in the section: Understand that one role of government
in the U. S. economy is to address market failures. Understand that
one role of government in the U. S. economy is to address market
failures. Analyze why governments provide public goods and
infrastructure. Analyze why governments provide public goods and
infrastructure. Explain how governments seek to decrease negative
externalities and increase positive externalities. Explain how
governments seek to decrease negative externalities and increase
positive externalities. Economics: concepts and choices, 2011. Holt
McDougal
Slide 16
PUBLIC GOODS F unded by taxes collected by the government. F
unded by taxes collected by the government. People cannot be
excluded from the benefits. People cannot be excluded from the
benefits. One persons use of the product does not reduce the
usefulness to others. One persons use of the product does not
reduce the usefulness to others. Free Riders Free Riders Pubic and
Private Sectors shared responsibilities Pubic and Private Sectors
shared responsibilities infrastructure infrastructure Economics:
concepts and choices, 2011. Holt McDougal
PUBLIC TRANSFER PAYMENTS Safety net Safety net Redistributing
income Redistributing income Transfer payments Transfer payments
Public transfer payment Public transfer payment Economics: concepts
and choices, 2011. Holt McDougal
Slide 19
CHECKING FOR UNDERSTANDING Illustrate the two characteristics
of public goods with examples. Illustrate the two characteristics
of public goods with examples. How is infrastructure linked to the
economy? How is infrastructure linked to the economy? Give an
example of a free rider. Give an example of a free rider. In 2003,
Congress passed laws to encourage private charitable organizations
to provide social services. They would compete for government funds
to carry out community services through their own networks. Do you
think this is an effective way to address social issues? Use
economic concepts, such as markets, efficiency, and opportunity
costs in developing your response. In 2003, Congress passed laws to
encourage private charitable organizations to provide social
services. They would compete for government funds to carry out
community services through their own networks. Do you think this is
an effective way to address social issues? Use economic concepts,
such as markets, efficiency, and opportunity costs in developing
your response. Economics: concepts and choices, 2011. Holt
McDougal
Slide 20
FINAL THOUGHTS Economics: concepts and choices, 2011. Holt
McDougal
