Presentation on theme: "Capitalism and Free Enterprise"— Presentation transcript:
1 Capitalism and Free Enterprise The American EconomyCapitalism and Free EnterpriseChapter 17Sec 3
2 Capitalism and Free Enterprise Capitalism- An economicsystem in which privatecitizens own and use thefactors of production in orderto seek a profit .Free Enterprise- Another termto describe the Americaneconomy. Competition isallowed to flourish with aminimum of governmentinterference- (Characteristic)- nation’seconomy ability to grow andaccumulate, or collect wealth
3 6 Features of Free Enterprise --US MarketsEconomic FreedomPrivate PropertyCompetitionProfit MotiveVoluntary Exchanges
4 Capitalism and Free Enterprise What makes Capitalism Work Markets- Markets connectdifferent sectors of theeconomy- Consumer Sovereignty- Usedto describe the consumer as the“king,” or ruler, of the market,the one who determines whatproduct to produce.Economic Freedom- Freedom tomake our own economicdecision.- choose the type of occupation- choose the products we want- produce the products we want- consequences of our choices
5 Capitalism and Free Enterprise What makes CapitalismWork continuedPrivate Property Rights- Theright we have the freedom toown and use, or dispose ofour own property as wechoose.- Incentive to work, save andinvest.Competition- The strugglebetween buyers and sellersto get the best products atthe lowest price.- cost of production is lowand quality is high- rewards efficient producers
6 Capitalism and Free Enterprise What makes CapitalismWork continuedThe Profit Motive-Profit – The amount of moneyleft over after all the costs ofproduction have been paid.Profit Motive- The drivingforce that encouragesindividuals and organization toimprove their material well-being.- Responsible for the growth ofa free enterprise system.Voluntary Exchange- The act ofbuyers and sellers freelyengaging in markettransactions.
7 Capitalism and Free Enterprise History of CapitalismIn 1776 Adam Smith, a Scottishphilosopher and economistprovide a philosophy for thecapitalist system in his book TheWealth of Nations.-individuals would work for theirown self interest.- They would be guided by an“invisible hand” to useresources efficiently.Laissez-faire Economics- aFrench term, means “to letalone”- Gov’t should not interfere inthe market place. (competition)