5. Free EnterpriseCapitalism

6. Free Enterprise

7. What is an economy? A place (market) where consumers (people that buy stuff…like you) are able to get together with people that sell stuff and exchange goods and services

8. Characteristics of a Market Economy 1. Right to choose jobs and professions 2. Own Private Property 3. Limited gov’t in economy 4. Competition between businesses drives the economy 5. Freedom to buy what we want.

9. Four Factors of Production Land: land and everything that comes from it; raw materials, natural resources Labor: people that work Capital: All resources used to produce a product like tools, machinery, factories, violins, ballet shoes, paint brushes and costumes. Entrepreneurship: a person or co. combines use of land, labor, and capital to come up with products. “The Idea Person”

15. Four main Economic Questions 1.What to produce? This is determined by available resources, what people want to buy and by the available technology. 2. How much to produce it? This is influenced by the available technology and natural resources. 3. How to produce it? Depending on the type of economic system, this is determined by the government, the marketplace, or by tradition 4. Who gets the goods? Determines who receives the goods and services and how much they receive.

16. GDP: Gross Domestic Income: Everything PRODUCED in a country in a giving year. Per capita Income: GDP divided by the number of people in a country (Per Capita=per person)

18. Set by tradition and Custom Low High Determined By the Ruler or Government Low to medium Average to High High Low Determined By Interaction of Producers and Consumers Producers decide What to Produce; Less Efficient Producers go out of Business Consumers Purchase what they want and can afford to Pay for High Low High

20. Market X