1. Fundamentals of a Market Economy
Private Property
Specialization
Consumer Sovereignty
Competition
Profit
Voluntary Exchange
Limited Government Involvement

2. 1. Private Property Property resources owned by private sector
Right to use, sell, abuse, bequeath
Buyers and sellers are free to own and use private property.

3. 2. Specialization
Buyers and sellers are able to concentrate their efforts in areas where they have an advantage.
A situation in which people concentrate their efforts in the activities that they do best
firms not truly free to make what they want; will only produce what individuals want to purchase

4. 3. Consumer Sovereignty
Buyers can exercise their dominance over what is produced by freely deciding whether to buy or not to buy.
The idea that consumers have the ultimate control over what is produced because they are free to buy what they want and to reject what they don’t want.

5. 4. Competition Businesses have to compete for the consumer’s dollar
Large number of buyers & sellers means
No one firm can control price in an industry
Increases quality of products
Lower prices for products

6. 5. Profit Sellers are free to attempt to maximize their profits.
A financial gain from a business transaction.

7. 6. Voluntary Exchange
When a buyer and seller agree to do business together, each believes that the benefits outweigh the costs.
Both sides think what they are getting is worth more than what they are giving up.

8. 7. Limited Government Involvement
Buyers and sellers must be free to operate with minimal government intervention.
Laissez faire – French meaning: “leave things alone”
All real-world market economies have some degree of government involvement.