Free Enterprise System Free Enterprise System In Introduction to Economics Philosophy that our nation’s founders believe that individuals should have the freedom of choice. In theory, the free enterprise system encourages individuals to start and operate their own businesses without government involvement.
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Free Enterprise System Free Enterprise System In Introduction to Economics Philosophy that our nation’s founders believe that individuals should have the.
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Free Enterprise SystemFree Enterprise SystemIn Introduction to Economics
Philosophy that our nation’s founders believe that individuals should have the freedom of choice.
In theory, the free enterprise system encourages individuals to start and operate their own businesses without government involvement.
CompetitionCompetitionStruggle between companies for customers that is both healthy and vital to out free enterprise system.
Price CompetitionFocuses on the sale price of a product.
Non-price CompetitionBusinesses choose to compete on the basis
of factors that are not related to price.
Competition, cont.Competition, cont.Direct CompetitionProduct or brand which competes in the same product category.
Indirect CompetitionA product that is in a different category altogether but which is seen as an alternative purchase choice.
Competition, cont.Competition, cont.
MonopolyExclusive control over a product or the means of producing it.
Are Monopolies Fair?Are Monopolies Fair?Risk
The potential for loss or failure.
ProfitThe money earned from conducting business after al costs and expenses have been paid.
Economic Benefits of Successful Firms Economic Benefits of Successful Firms Vs.Vs.
Economic Cost of Unprofitable FirmsEconomic Cost of Unprofitable Firms
The Role of Government:
1. Provide general services (fire, police, education)
2. Support business (SBA, loans for businesses)
3. Regulates business (worker, business protection)
4. Competes with small business (TVA, Mail, Amtrack)
The Role of Consumers:
1. Pick the winners
2. Determine how much demand
3. Keep it a customer oriented society
System by which a nation decides how to use its resources to produce and distribute goods and services.
3 Basic Economic Questions: What is produced?How is it produced?
For whom is it produced for?
Economic SystemsEconomic Systems
Market EconomyNo government involvement in economic decisions.
Command EconomyThe government answers the economic questions.
What countries economies are a pure market or pure command?
Economic Systems, cont.Economic Systems, cont.By answering the 3 basic questions, you will fit into 1 of 2 categories.
Mixed EconomiesMixed EconomiesCapitalism
The economic market system characterized by private ownership of businesses and marketplace competition.
SocialistIncreased amount of government involvement in order to reduce the differences between rich and poor.
CommunistTotalitarian--that means that the government runs everything.
WHO DOES THIS SOUND LIKE?
GERMANY, FRANCE, AUSTRALIA
CUBA, NORTH KOREA
Mixed Economy, cont.Mixed Economy, cont.
PrivatizationProcess of selling government-owned business to private individuals.
CapitalThe money needed to start and operate a business, which also includes the goods used in the production process.
LaborAll the people who work in the economy.
LandRefers to everything in its natural state.
EntrepreneurhsipRefers to the skills of the people who are willing to risk their time and money to run a business.
Factors of ProductionFactors of ProductionEconomist term for resources.
Production, cont.Infrastructure
The physical development of a country, which includes the roads, ports, sanitation facilities, and utilities.
ResourcesAll the things used in producing goods and services.
Choices
Scarcity
What How For Whom
UnlimitedUnlimitedNeeds & WantsNeeds & Wants
LimitedLimitedResourcesResources
ScarcityThe difference between needs and wants, and
available resources.
Economics BasicsEconomics BasicsDemand
Refers to consumer willingness and ability to buy products.
SupplyThe amount of goods producers are willing to make and sell.
EquilibriumExists when the amount of product supplied is equal to amount of product demanded.