1. Chapter 2: Free Enterprise in the United States

2. How It Works…
We have a MIXED-MARKET Economy, and it is run by a FREE ENTERPRISE SYSTEM
What is a FREE ENTERPRISE SYSTEM?
People are free to make their own choices and the government only intervenes when necessary.

3. What is a Pillar?
Pillars support our free enterprise system…There are six total but three of those we will discuss today:
Private Property
Specialization
Voluntary Exchange
Price System
Market Competition
Entrepreneurship

4. Private Property
The desire to take care of, make decisions for, and produce income from your own personal property!

5. Price System
Prices act as messengers. Prices communicate to businesses how will customers are to produce the product.
Second, prices provide strong incentives to businesses and consumers
Rising Prices=Increase in Production------Increase in Prices=Consumers Looking for Bargains (Vice Versa)

6. Market Competition Competition in Resource Markets
Fighting over who gets what resources
Competition in Markets for Products
Buyers competing with Buyers
Sellers competing with Sellers
Competition in Life
With school mates, in career choices, etc.

7. Circular Flow of Money
Households—1. Buy the goods and services and 2. also own resources (ex. Labor)
Households exchange their services such as labor in order to receive wages/income to buy the goods needed

8. Functions of Money
Medium of Exchange—EVERYONE wants money; easy to exchange goods and services because money is a happy medium
Store of Value—Easy to hold on to and use in the future; you can place in a bank or pockets; doesn’t lose value!
Measure of Value—when used in an exchange, each product or resource has a single money price; able to compare prices to find the best value!

9. Goals of Our Economic System
Full Employment
Economic Growth
Price Stability
Economic Freedom
Economic Security
Economic Equity
Efficiency