8Discussion #1Name a good/service and identify some of the human or natural resources or capital goods needed to produce or provide it.
9HistoryThroughout the history of the United States, private enterprise has enabled the nation to produce more goods and services than any other country.
10Characteristics of a Private Enterprise System Freedom in the marketplacePrivate PropertyLimited government controlCompetitionThe Profit Motive
11Freedom in the Marketplace Marketplace is any place where buying or selling of goods and services occurMarket decides what, how, and for whom to produceMarkets are self-regulating and self-controlled
12Businesses are free to choose What they wish to produceWhich resources to produceWhat techniques of production to useHow their goods and services will be marketedWhat price to chargeWhen to close down or go out of business
13Freedom in the Marketplace Consumers may purchase anything that can be legally sold as long as they can pay.Each consumer casts a economic vote.
14Economic Vote Enable consumers to control what will be produced. If consumers don’t buy a product, the producers mustChange itReplace itGo out of business
15Consumer Responibilities The Consumer has the responsibility to be well informed and to make educated choices in the marketplace so that producers will continue to make good products at fair prices.
16Discussion #3Identify examples of products that did not fare well in the marketplace.
17Private PropertyAnything of value that people own is considered private property.Business PropertyPersonal PropertyFormsLand, Furniture, Buildings, Resources, Jewelry, Money, Equipment, Clothing, Stocks
18Private PropertyOwnership of private property includes ownership of the results of your workFarmers’ own the crops they raiseWorkers’ own the wages they earnBusinesses’ own goods and services they produceIndividuals’ own profit that comes from the sale of private property
19Private Property Individuals and businesses in a private enterprise economy are free to decideHow to use their private propertyWhen and how to sell it
20Private Property Owners Enter freely into contracts involving their private propertyStop others form using their private propertyAbuse their private property as long as they are not stepping on the rights of othersControl their private property in any way they chooseUse their private property to make incomeKeep any income earned by renting, leasing, or selling their private property
21Limited Government Control United States system is not a pure private enterprise because there is a limited amount of government control.US system is mixed – individuals and businesses are the primary economic decision makers, while government helps to regulate and control the system.In the US, the government steps in only to protect citizens; otherwise it lets them pursue their goals.
22Limited Government Contol Government is like a referee, ensuring that individuals play according to the rules.
23Limited Government Control Government has expandedInflationPollutionUnemployment
24CompetitionThere are many different ways to produce a good or provide a service.Example - Books can bePrinted on paperUsing various fontsBound with hard or soft coversSold at high, medium and low prices
25CompetitionSince there are so many different ways to produce products, the company that finds the most efficient way is the one that will be able to compete successfully.
26CompetitionRivalry between two or more businesses to attract scarce customer dollars
27Competition Other ways to compete Give better credit options Improve your goods and servicesCreating new goods and servicesProviding better service than their competitors
28Discussion #6Name examples of competing business in the US Private Enterprise system.
29The Profit MotiveProfit is the monetary reward business owners receive in return for taking the risk involved in starting a business.The desire to make a profit forms the economic basis for the private enterprise system.
30The Profit MotiveIf a business did not make a profit, it would cease to exist.The freedom to use your private property to make a profit is as important as the freedom to own property in the first place.Profit serves as a motive for starting a business and a goal toward which the individual or business can work.
31The Profit MotiveIndividuals and businesses in private enterprise can keep any profit they earn or they can use it in any way they wish.For this reason, many people consider making a profit the greatest motivating factor in the private enterprise system.
32Discussion #7Do you agree or disagree that the profit motive is the most important factor in the private enterprise system. Why or why not?
33The Price-Directed System Price determinesWhat consumers buyWhich jobs they will takeThe success or failure of businessesThe types of products that will be produced
34The Price-Directed System Prices are important in making the system work correctly.Supply and demand work together to determine prices in the private enterprise system.Consumers indicate demand by the prices they are willing to pay
35Disadvantages of the U.S. Private Enterprise System There are times when production drops because sales are low.Companies may lay off workers or even go out of business.This results in periods of unemployment.Poverty has not been eliminated
36Disadvantages of the U.S. Private Enterprise System Property and income are not distributed equally in the private enterprise system.Some people own a great deal of property, while other own little or none.This unequal distribution of income exists because workers with higher levels of education, training, skills, and efficiency generally receive higher salaries than less qualified workers.
37Discussion #8Can you think of other disadvantages to the private enterprise system?
38Private EnterprisePrivate Enterprise is based on the idea that everyone is better served when individuals are free to set their own goals.
39Private EnterpriseWhen people are free to make personal economic choices and to set economic goals for themselves, they work harder to achieve those goals.This benefits them, and because it increases production, it benefits the economic system as a whole.
40Private EnterpriseEconomic freedom does not guarantee success to individuals or to businesses, but it does provide the opportunity for success.There are few countries that offer as much economic freedom as US citizens enjoy under its private enterprise system.
41Economic Freedoms Freedom to choose Choose your own personal goals. Choose the work you would like to do.Decide to go into business for yourself.Make a variety of economic choices.
42Economic Freedoms Freedom to own, use, buy, and sell private property. You own your property, your business profits, your wages, interest paid to you, your time, and your talent.You are free to put them to whatever use will be of the most benefit to you.You are free to make as much income as you would like.Your are free to save, spend and invest your money as you choose.You can do with your land and home as you choose.You can buy goods and services anywhere.
43Economic Freedoms Freedom to compete Competition is important characteristic of private enterprise.The freedom to compete is also an important economic freedom for individualsIf you own your own business, you can compete with similar businesses for customers.
44Economic FreedomsFreedom to compete allows you to market your assets to your best advantage.
45Limits to Economic Freedoms People in a private enterprise system cannot buy anything and everything they might like to.Limiting factorsCompetitionExample – if all the tickets are sold for a concert, you won’t be able to purchase one.
46Limits to Economic Freedoms People are also limited by their own choices.If you choose to purchase one thing, you may not be able to purchase another.You may need to choose which item is more important to you.If you sell your private property to one person, you cannot sell the same property to anyone else.
47Limits to Economic Freedoms Economic freedom is also limited by the laws that have been created to protect people.Businesses may be required to be licensed to safeguard public health.Workers in such professions as health and law:Require specialized trainingMust pass examinations before they are allowed to provide their services.
48Limits to Economic Freedoms Business may not:Dump their wastes into streams.Sell products that are unsafe.Make false advertising claims about what products will do.
49Limits to Economic Freedoms No one is permitted to sell:Illegal drugs.Stolen property.Services for which s/he are not trained or licensed to perform.
50Limits to Economic Freedoms To have the money necessary to run the country, the government collects taxes from individuals and businesses.This restricts economic freedom since taxpayers cannot use all of their income for their own purposes.However, taxes are a necessary limit to economic freedom since they provide the money needed to pay for:Fire and police protectionPublic schoolsHighway construction and repairOther services that people need to operate their businesses