CHARACTERISTICS OF THE MARKET SYSTEM

PRIVATE PROPERTY RIGHTS/CONTRACTS 1.People have the right to do what they want with their own money. 2.Private property gives people the motivation to work hard, save money, and invest 3.Contracts are agreements made between people to buy and sell. 4.Contracts may be written or spoken, but either way, we are legally bound to honor our agreements.

ECONOMIC FREEDOM 1.You are free to -choose your job -choose where and when you work -work for yourself or for someone else 2. Businesses are free to -choose which workers they want to hire -determine how much business they want to do

COMPETITION 1.The market system depends on competition between economic units (people and businesses) 2.Basis : freedom of choice in pursuit of gain 3.Requires : -independent, well-informed buyers and sellers -freedom of buyers and sellers to enter and leave market based on their self-interest 4. Result : more variety, higher quality, lower prices

THE GENIUS OF COMPETITION IN THE MARKET SYSTEM

VOLUNTARY EXCHANGE 1.People and businesses want to business with each other; nobody forces them to do it (remember GREED video) 2.When people and businesses make the exchange, they are better off.

PROFIT MOTIVE 1.People are free to risk what they own in order to make even more money. 2.Chance of economic success is incentive to entrepreneurs 3.Definitions -PROFIT : how much better of a person or business is after a period of time -PROFIT MOTIVE : the force that makes people and businesses want to earn more money.

ROLE OF GOVERNMENT 1.Active, but limited 2.Acts as a protector -makes and enforces laws -enforces contracts 3. Acts as a provider and a consumers -provides goods and services that businesses don’t provide -consumes because it buys items from businesses (EX : L3) 4. Regulator -makes rules for businesses to follow (EX : FCC)