1. Free Enterprise in the United States

2. The Pillars of the Free Enterprise System
Private Property
The Price System
Market Competition
Entrepreneurship

3. Private Property
The capital and other resources owned by individuals rather than governments.

4. Private Property
The ownership of private property is guaranteed by the United States Constitution.

5. The use of prices to allocate scarce resources.
The Price System
The use of prices to allocate scarce resources.

6. The Price System
When buyers and sellers make exchanges in markets, they establish prices for goods, services and resources.

7. Market Competition
The rivalry among buyers and sellers in the purchase and sale of resources and products.

8. Market Competition
Fair competition allows consumers to gain the highest quality of product for the lowest possible price.

9. Sellers are also competing for market share against one another.
Market Competition
Sellers are also competing for market share against one another.

10. Market Competition
Those who succeed earn a profit, which is the money remaining after deducting total cost from total revenue.

11. Entrepreneurship
Seeing opportunities and acting on them to introduce new or better goods and services to the market.

12. Free enterprise encourages and nurtures entrepreneurs.
Entrepreneurship
Free enterprise encourages and nurtures entrepreneurs.

13. Think of at least two ways our government encourages entrepreneurs.
Discussion
Think of at least two ways our government encourages entrepreneurs.

14. The Circular Flow
Chart 2.2 on page 16 explains how money in a free enterprise system flows.
Copy this chart into your notes.

15. Vocabulary: Circular Flow
Households: include every person in the US despite the dwelling they live in.

16. Vocabulary: Circular Flow
Consumers: People who buy and use products and services.

17. Vocabulary: Circular Flow
Resource Owners: Owners of the economy’s resources.

18. Vocabulary: Circular Flow
Most of the nation’s resources are owned by households.

19. Vocabulary: Circular Flow
Goods and services markets: Voluntary exchanges between consumers and business markets.

20. Vocabulary: Circular Flow
Resource Markets: Voluntary exchanges between resource owners and businesses (labor).

21. Uses of Money
In ancient times, most exchanges took place through barter.
When money is used as a medium of exchange, transactions are easier.

22. Uses of Money
Store of Value: By receiving payment in money rather than goods, you can save its buying power for future use.

23. Uses of Money
Measure of Value: Money enables us to assess the value of certain goods and services
Example: The value of labor

24. Goals of the Free Enterprise System
Turn to page 20 in your text book and list the goals of the free enterprise system in your notebook.

25. Different Economic Systems
Free Enterprise-Defined in Chapter 2
Command- Government control of all economic decisions.
Traditional-most people complete the same economic tasks
Mixed-elements of more than one type of economy. ALL SYSTEMS ARE MIXED!