Economics: Chapter 3: The American Free Enterprise System

Chapter 3: The American free enterprise system

Section 1: Lesson Framework

• We will explain why the United States is considered to have a capitalist, or free enterprise, system.

• I will identify the legal rights that safeguard the free enterprise system.

• I will analyze how the profit motive and competition help to make the free enterprise system work.

Chapter 3: The American free enterprise system

Section 1: advantages of the free enterprise system

• A capitalist system is also known as a free enterprise system because anyone is free to start a business or enterprise.

• Individual choices are the basis of a market economy.

• Consumers make their own choices on which goods and services they will buy.

Chapter 3: The American free enterprise system

Section 1: advantages of the free enterprise system

• Government can support free enterprise by:

• protecting and encouraging competition

• enforcing contracts

• keeping business costs low

Drag and Drop

​

Placeholder

is another name for capitalism.

Drag these tiles and drop them in the correct blank above

free enterprise system

needs

wants

scarcity

Chapter 3: The American free enterprise system

Section 1: advantages of the free enterprise system

• open opportunity IS THE ABILITY FOR EVERYONE to take part in the market by free choice.

• legal equality is a situation in which everyone has the same economic rights under the law.

• A free contract is a situation in which people decide which legal agreements to enter into.

• the profit motive is the force that encourages people and organizations to improve their material well being from economic activities.

Drag and Drop

The ​

Placeholder

drives people to seek financial gain by coming up with products and services that meet consumers' wants.

Drag these tiles and drop them in the correct blank above

profit motive

open opportunity

legal equality

free contract

The pet rock

small group activity

Let's read page 73, "Profit in Rocks."

RANDOMIZER

The pet rock

Let's read page 73, "Profit in Rocks."

The pet rock

small group activity

Let's discuss the PET ROCK phenomenon

Poll

What do you think?

• Gary Dahl created a consumer demand for pet rocks.

• Gary Dahl responded to an actual consumer want.

The pet rock

small group activity: analyze consumer wants and develop a product idea

• Using the PET ROCK phenomenon, develop a new fad idea.

• Create an engaging description of your product.

• Analyze if it meets or creates consumers' wants.

• Present your fad to the rest of the class.

Section 2: how does free enterprise allocate resources

The roles of producers and consumers

• In the marketplace, consumers buy products for their personal use from producers who make or provide goods or services.

• Seeking opportunities to earn profits is one way producers help allocate scarce resources in the economy.

Section 2: how does free enterprise allocate resources

The roles of producers and consumers

• Local Coffee Shop: charge the highest price consumers are willing to pay.

• Others see the opportunity and open coffee shops.

• Resources are allocated to these coffee shops.

Section 2: how does free enterprise allocate resources

consumers vote with their wallets

• When consumers choose to buy a product, they are "voting" for their choice against competition products.

• Determines what will be produced in the future.

Section 2: how does free enterprise allocate resources

government in the u.s. economy

• Government is an important element in the American economic system, but its role is relatively limited.

• This is referred to as modified free enterprise economy: a free enterprise economic system with some government involvement.

Multiple Choice

Producers are motivated to enter markets that offer the possibilities for the highest profits.

• True

• False