Chapter 3 Our Free Enterprise System

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Chapter 3 Our Free Enterprise System
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Activity 1 Individual

• If you could open a restaurant in Miami what kind
  would you open and why? Discuss.
• Location
• Type of Food
• Motive

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Free Enterprise System

• Encourages Entrepreneurship
• Little Government Intervention
• Freedom to Own Property
• Compete in the Marketplace
• Risk
• With the hopes of making a PROFIT!

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What is Competition?

• The struggle between companies for customers.
• It promotes better quality goods
• Provides a wider selection of goods
• Brings down prices

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Two Types of Competition

• Price Competition (Price)
• Non Price Competition (quality)
• Monopoly (no competition)

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What is Risk?

• The potential for loss or failure
• 1 in 3 businesses fail within the first year of
  operation.
• 85 of new products fail in the first year.
• If these figures are true why do entrepreneurs
  start these businesses?

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PROFIT!

• The money earned from conducting business after
  all costs and expenses have been paid. (1-5 of
  Sales)
• Sales Costs Expenses Profit or Net Profit

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What happens when companies are not profitable?

• Lay off employees
• Investors can loose money
• Suppliers lose money
• Government suffers - less taxes
• Unemployment goes up

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What does the Government do for YOU?

• Provides Services
• Supports Businesses
• Regulates
• Competes

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The Role of the Consumer

• You pick the products that win in the marketplace
• You help determine prices!

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Supply Demand
DEMAND

SUPPLY
EQUILIBRIUM
Quantity
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Surpluses v.s. Shortages
S
Surplus
D

Shortage
Quantity
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Activity 2 In the Chips