1. Marketing I Curriculum Guide

2. Objective To understand the role of business in the free enterprise system. Be able to define free enterprise system Understand the differences between the ecomomic system in the US and other countries around the world.

3. Free Enterprise System The Free Enterprise System is an economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market. -American Heritage Dictionary The Free Enterprise System is a political and economic philosophy often referred to as capitalism.

4. Four Pillars of the Free Enterprise System Private Property Price System Competition Entrepreneurship

5. Market Economy Circular Flow

6. Mixed Economy Circular Flow

7. All countries must answer the three basic economic questions… What goods and services should be produced? How should the goods and services be produced? For whom should the goods and services be produced and distributed?

8. Economic Systems Traditional – An economic system in which habits, traditions, and rituals answer the basic questions of what, how, and for whom. Command – A system in which a country’s government makes all economic decisions regarding what, how, and for whom goods and services will be produced and distributed. Market – In a pure market economy, there is no government involvement in economic decisions. Individuals and companies own the means of production and businesses compete for consumers. The market answers what, how, and for whom. Mixed – An economy with elements of both command and market. Individuals, companies, and government decide what, how, and for whom goods and services will be produced and distributed.

9. Economic Systems Capitalism- Positive: Right to own property, competition, and entrepreneurship. Negative: creates classes in society, high risk of failure, monopolies. Socialism-Positive: removes classes, what is good for one is good for all, provides government support (i.e. health care, education, etc.) Negative: Higher taxes, lower motivation. Communism: Positive: removes classes, everyone is equal, no taxes. Negative: no motivation, government has the final say.

10. Scarcity Scarcity: fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources

11. Law of Supply and Demand Law of Supply: as the price of a good or service increases, the quantity of goods or services offered by suppliers increases Law of Demand: as the price of a good or service increases, consumer demand for the good or service will decrease

12. Supply and Demand