Presentation on theme: "Chapter 17 Sec 3. Capitalism Capitalism- An economic system in which private citizens own and use the factors of production in order to seek a profit."— Presentation transcript:
Capitalism Capitalism- An economic system in which private citizens own and use the factors of production in order to seek a profit. Free Enterprise- Another term to describe the American economy. Competition is allowed to flourish with a minimum of government interference - (Characteristic)- nation’s economy ability to grow and accumulate, or collect wealth
6 Features of Free Enterprise --US Markets Economic Freedom Private Property Competition Profit Motive Voluntary Exchanges
What makes Capitalism Work Markets- Markets connect different sectors of the economy - Consumer Sovereignty- Used to describe the consumer as the “king,” or ruler, of the market, the one who determines what product to produce. Economic Freedom- Freedom to make our own economic decision. - choose the type of occupation - choose the products we want - produce the products we want - consequences of our choices
What makes Capitalism Work continued Private Property Rights- The right we have the freedom to own and use, or dispose of our own property as we choose. - Incentive to work, save and invest. Competition- The struggle between buyers and sellers to get the best products at the lowest price. - cost of production is low and quality is high - rewards efficient producers
What makes Capitalism Work continued The Profit Motive- Profit – The amount of money left over after all the costs of production have been paid. Profit Motive- The driving force that encourages individuals and organization to improve their material well- being. - Responsible for the growth of a free enterprise system. Voluntary Exchange- The act of buyers and sellers freely engaging in market transactions.
History of Capitalism In 1776 Adam Smith, a Scottish philosopher and economist provide a philosophy for the capitalist system in his book The Wealth of Nations. -individuals would work for their own self interest. - They would be guided by an “invisible hand” to use resources efficiently. Laissez-faire Economics- a French term, means “to let alone” - Gov’t should not interfere in the market place. (competition)