Ch. 2 Section 3 Notes: American Free Enterprise

American Free Enterprise: Resources are privately owned & competition is allowed to flourish with a minimum of government interference.

Five Characteristics of Free Enterprise 1. Economic freedom A. Individuals-freedom to choose jobs, goods B. Businesses freedom to choose who, how, where, what C. Free to risk success or failure 2. Voluntary Exchange A. buyers & sellers freely & willingly engaging in market transactions

Characteristics of Free Enterprise cont’d 3. Private Property individuals and businesses are free to control their own possessions   4. Profit Motive A. individuals & businesses improve their material well-being by making money 5. Competition free to compete with each other to attract customers. This leads to better products and service.

The Entrepreneur is the most important role in free enterprise! A. When an entrepreneur takes risks to develop new products, the entire economy benefits. B. Entrepreneurs benefit with profits, a growing business, and satisfaction with a job well done C. Workers benefit with more and better paying jobs D. Consumers are rewarded with new and better products. E. Government benefits with a higher level of economic activity which leads to larger tax receipts for schools, roads, national defense, and everything else our tax dollars pay for.

The Role of the Consumer: When we shop at stores, buy products, and pay for services, we determine which goods are going to continue to be produced. Therefore, consumers cast their “votes” with the $$$ that they spend in the marketplace.

The Role of Government: Their role is determined by the citizens! We determine if we want the government involved in our economy and to what extent we want them involved.   The four major roles of the government include: 1. Protector-enforces laws (unsafe food, contracts) and make sure our individual freedoms are safe 2. Provider- provides goods & services for citizens (justice system, national defense, education, roads) 3. Regulator (businesses)- preserve competition, also regulates banks 4. Consumer-consumes scarce resources to fulfill their roles.