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CHAPTER 3 THE AMERICAN FREE ENTERPRISE SYSTEM
Transcript of CHAPTER 3 THE AMERICAN FREE ENTERPRISE SYSTEM
Vincent Quiroz CHAPTER 3
THE AMERICAN FREE ENTERPRISE SYSTEM Free enterprise system-an economic system based on private ownership of productive resources SECTION 1
Advantages of the Free Enterprise System ex) a taco stand in Tj he made millions Legal equality- Where everyone has the same economic rights Open Opportunity-ability for anyone to enter and compete in the market out of free will or interest. Free Contract- a contract thats free. jk. A situation in which people decide which legal agreements to enter into. who is this guy? Profit Motive- an invinsible force (jedi) that encourages people to improve their product and sell more to get profit. ONE MEMORABLE EXAMPLE KEY Terms Gary Dahl was talking with his friends about cats and came up with the idea of selling pet rocks. He made millions off this within the first year of marketing. Unfortunately, no one became interested in buying rocks the next year and Gary ran out of bussiness. what is the free enterprise system? How it comes together The Free Enterprise System gives everyone an Open Opportunity to thrive in the free market. All businessmen/women who participate in this free market must have Legal Equality so that everything is fair and must have some sort of free contract that states that they will be able to work in what ever work place they want to. All this is caused by the profit motive in which they gain lots of profit if they succeed <----- Milton Friedman An economist who gave many ideas that later influenced the free market that the U.S. has today. His ideas were very widely recognized and influential. Section 2 How does free enterprise allocate resources? look at this and you will know Key Terms Profit- the difference between the purchasing price and the costs of bring to market Modified Free Enterprise Economy- a free enterprise system with government involvment Section 3 Key Terms Market Failure- when people who are not part of a marketplace interaction benefit from it or pay part of its costs. Government and Free Enterprise Public Goods-products made by the government and consumed by the public Free rider- a person who chooses not to pay for a good or service but benefits from it when it is provided Infrastructure- the nations infrastructure consists of goods and services that are necessary to help the economy function properly. Externality- a side effect of a transaction that effects either the producer of buyer Negative Externality- a bad externality Positive Externality- a good externality Subsidy- a payment from the government to cover the cost of an economic activity that can benefit alot of things. Safety Net- government programs made to protect people from economic hardship Transfer Payments- income transfered from one person/group to another Public Transfer Payment- a transfer payment in which the government tranasfers income from taxpayers to recipients What are Public goods? Public goods are either goods or services provided by the government for the public to be consumed. Two charecteristics of public goods are that no one can be exxcluded from them and a persons use of the product does not reduce its usefulness to others EX) street lights and fireworks THE END