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Benefits of Free Enterprise

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Title: Benefits of Free Enterprise

1
Benefits of Free Enterprise

Objective
What are the basic principles of the U.S. free
enterprise system?
What role does the consumer play in the system of
free enterprise?
What is the role of the government in the free
enterprise system?

Be sure to leave a couple blank lines under each
question and answer the questions at the end of
the lesson.
2
CA Standard(s) Covered
12.3 Students analyze the influence of the
federal government on the American economy. 1.
Understand how the role of government in a market
economy often includes providing for national
defense, addressing environmental concerns,
defining and enforcing property rights,
attempting to make markets more competitive, and
protecting consumers rights.
3
Current Event Video
4
Chapter 3 Video
5
The Basic Principles of Free Enterprise
Several key characteristics make up the basic
principles of free enterprise.
1. Profit Motive The drive for the improvement
of material well-being. 2. Open opportunity The
ability for anyone to compete in the
marketplace. 3. Legal equality Equal rights to
all. 4. Private property rights The right to
control your possessions as you wish.
5. Free contract The right to decide what
agreements in which you want to take part. 6.
Voluntary exchange The right to decide what and
when you want to buy and sell a product. 7.
Competition The rivalry among sellers to attract
consumers.
6
The Consumers Role

A fundamental purpose of the free enterprise
system is to give consumers the freedom to make
their own economic choices.

Through their economic dealings with producers,
consumers make their desires known. When buying
products, they indicate to producers what to
produce and how much to make.
Consumers can also make their desires known by
joining interest groups, which are private
organizations that try to persuade public
officials to vote according to the interests of
the groups members.
7
The Governments Role
Americans expect the government to protect them
from potential problems that arise from the
production of various products or the products
themselves. Americans generally favor limited
government intervention in the economy.

Public Disclosure Laws
Laws that require companies to provide consumers
with important information about their products,
such as fuel efficiency of automobiles,
side-effects of medication.
-This medicine may cause drowsiness, etc.
Public Interest
Both state and federal governments involvement
in concerns of the public as a whole, such as
environmental protection, sanitary food
production.
-Expirations dates on food

8
Current Event Video
9
Section 1 Assessment

1. Americans generally favor
(a) strong government control of the economy.
(b) limited government intervention in the
economy.
(c) no government intervention in the economy.
(d) government control of manufacturing only.
2. The basic principles of free enterprise do
NOT include
(a) competition.
(b) legal equality.
(c) profit motive.
(d) checks and balances.

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10
Section 1 Assessment

1. Americans generally favor
(a) strong government control of the economy.
(b) limited government intervention in the
economy.
(c) no government intervention in the economy.
(d) government control of manufacturing only.
2. The basic principles of free enterprise do
NOT include
(a) competition.
(b) legal equality.
(c) profit motive.
(d) checks and balances.

Lets check out whats NOT good to buyClick Here!
11
HW

Read pages 51 - 55 and
complete questions 1-3 p. 55.

12
Promoting Growth and Stability

Objective
How does the government track and seek to
influence business cycles?
How does the government try to promote economic
strength?
Why and how does the government encourage
innovation?

Be sure to leave a couple blank lines under each
question and answer the questions at the end of
the lesson.
13
CA Standard(s) Covered

12.3 Students analyze the influence of the
federal government on the American economy.
Understand how the role of government in a market
economy often includes providing for national
defense, addressing environmental concerns,
defining and enforcing property rights,
attempting to make markets more competitive, and
protecting consumers rights.
12.4 Students analyze the elements of the U.S.
labor market in a global setting.
2. Describe the current economy and labor market,
including the types of goods and services
produced, the types of skills workers need, the
effects of rapid technological change, and the
impact of international competition.

14
Tracking Business Cycles

Macroeconomics is the study of the behavior and
decision making of entire economies.
Microeconomics is the study of the economic
behavior and decision making of individuals,
families, households and businesses.
A business cycle is a period of a macroeconomic
expansion followed by a period of contraction.
One measure of a nations macroeconomy is gross
domestic product (GDP). GDP is the total value of
all final goods and services produced in a
particular economy.
Economists use GDP to predict business cycles

15
Promoting Economic Strength
Policymakers pursue three main outcomes as they
seek to stabilize the economy.

Employment
One aim of federal economic policy is to provide
jobs for everyone who is able to work.
Unemployment 3 - 11 in US (over last 50
years)
Unemployment Rate 9.4 for 2010
Growth
For each generation of Americans to do better
than previous ones, the economy must provide
steady growth and continue to produce additional
goods and services.
Stability
Stability gives consumers, producers, and
investors confidence in the economy and in our
financial institutions, promoting economic
freedom and growth.
Avoid sudden drastic changes in prices.

16
Encouraging Innovation

The government encourages advances in technology
and improvements in productivity in several ways.
Technology is the process used to produce a good
or service.

Federal agencies fund many research and
development projects. Also, new technology often
evolves out of government research.
Govt Grants
NASA

A patent gives the inventor of a new product the
exclusive right to produce and sell it for 20
years.

17
Current Event Video
18
Section 2 Assessment

1. Policymakers encourage all of the following
EXCEPT
(a) stable productivity.
(b) high employment.
(c) stable prices.
(d) steady growth.
2. The government encourages advances in
technology and improvements in productivity by
(a) maintaining steady price controls.
(b) funding research and development projects at
many levels.
(c) hiring more workers to reduce unemployment.
(d) regulating banks and other financial
institutions.

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19
Section 2 Assessment

1. Policymakers encourage all of the following
EXCEPT
(a) stable productivity.
(b) high employment.
(c) stable prices.
(d) steady growth.
2. The government encourages advances in
technology and improvements in productivity by
(a) maintaining steady price controls.
(b) funding research and development projects at
many levels.
(c) hiring more workers to reduce unemployment.
(d) regulating banks and other financial
institutions.

Lets watch NASA TV!!! Click Here!
20
HW

Read pages 57 - 60 and
complete questions 1 - 6 p. 60.

21
Providing Public Goods

Objective
What are public goods?
What is a market failure?
How does government manage externalities?

Be sure to leave a couple blank lines under each
question and answer the questions at the end of
the lesson.
22
CA Standard(s) Covered

12.3 Students analyze the influence of the
federal government on the American economy.
Understand how the role of government in a market
economy often includes providing for national
defense, addressing environmental concerns,
defining and enforcing property rights,
attempting to make markets more competitive, and
protecting consumers rights.

23
Public Goods

A public good is a shared good or service for
which it would be impractical to make consumers
pay individually and to exclude nonpayers.
Public goods are funded by the public sector, the
part of the economy that involves transactions of
the government.
A free rider is someone who would not choose to
pay for a certain good or service, but who would
get the benefits of it anyway if it is provided
as a public good.
Would you pay for the new Bay Bridge? Would you
use it?

24
Market Failures

Would the free market ensure that roads are built
everywhere they are needed?
Its doubtful. Neither could individuals afford
to pay for a freeway.

A market failure is a situation in which the
market, on its own, does not distribute resources
efficiently.
25
Externalities

An externality is an economic side effect of a
good or service.
The building of a new dam and creation of a lake
generates
Positive Externalities
A possible source of hydroelectric power
Swimming
Boating
Fishing
Lakefront views
Negative Externalities
Loss of wildlife habitat due to flooding
Disruption of fish migration along the river
Overcrowding due to tourism
Noise from racing boats and other watercraft
The government tries to encourage positive
externalities and limit negative externalities.

26
Current Event Video
27
Section 3 Assessment

1. Which of the following is an example of the
public sector (Public Good) of the economy?
(a) consumers purchasing goods from a private
company
(b) laborers working for a private construction
company
(c) government funding for a new national park
(d) individual donations to charity
2. What is government's role in controlling
externalities in the American economy?
(a) government tries to encourage positive
externalities and limit negative externalities
(b) government tries to limit all externalities
because they represent market failure
(c) government tries to limit positive
externalities and encourage negative
externalities
(d) government tries to encourage all
externalities so that the market will be
competitive

Lets check out the Sierra Club in SF Bay Area
Click Here!
28
Section 3 Assessment

1. Which of the following is an example of the
public sector (Public Good) of the economy?
(a) consumers purchasing goods from a private
company
(b) laborers working for a private construction
company
(c) government funding for a new national park
(d) individual donations to charity
2. What is government's role in controlling
externalities in the American economy?
(a) government tries to encourage positive
externalities and limit negative externalities
(b) government tries to limit all externalities
because they represent market failure
(c) government tries to limit positive
externalities and encourage negative
externalities
(d) government tries to encourage all
externalities so that the market will be
competitive

Lets check out the Sierra Club in SF Bay Area
Click Here!
29
HW

Read pages 62-66 (Ch. 3 Section 3) and complete
questions 1-3 p. 66.
Read pages 67-70 (Ch. 3 Section 4) and complete
questions 1-4 p. 70.
Study for Test!

30
Providing a Safety Net

Objective
What role does the government play in fighting
poverty?
What government programs attempt to aid those
facing poverty?

Be sure to leave a couple blank lines under each
question and answer the questions at the end of
the lesson.
31
CA Standard(s) Covered
12.3 Students analyze the influence of the
federal government on the American economy. 3.
Describe the aims of government fiscal policies
(taxation, borrowing, spending) and their
influence on production, employment, and price
levels.
32
The Poverty Problem
The poverty threshold is an income level below
that which is needed to support families or
households.

The poverty threshold is determined by the
federal government and is adjusted periodically.
In 2010 14,570 (single parent w/ 1 child)
Welfare is a general term that refers to
government aid to the poor.
Began by President FDR in the 1930s

http//aspe.hhs.gov/poverty/09poverty.shtml
33
Redistribution Programs
Cash transfers are direct payments of money to
eligible people.
Temporary Assistance for Needy Families
(TANF) This program allows individual states to
decide how to best use federally provided funds.
Social Security Social Security provides direct
cash transfers of retirement income to the
nations elderly and living expenses to the
disabled. Stability Unemployment compensation
provides money to eligible workers who have lost
their jobs. Workers Compensation Workers
compensation provides a cash transfer of state
funds to employees injured while on the job.
34
Other Redistribution Programs

Besides cash transfers, other redistribution
programs include
In-kind benefits
In-kind benefits are goods and services provided
by the government for free or at greatly reduced
prices.
Medical benefits
Health insurance is provided by the government
for the elderly and disabled (Medicare) and for
poor people who are unemployed or are not covered
by their employers insurance (Medicaid).
Education benefits
Federal, state, and local governments all provide
educational opportunities for those in need.