Chapter 13 Our Economic System Chapter 13 Our Economic System Lesson 13.1 The Free Enterprise System...

Chapter 13Our Economic System

Chapter 13Our Economic System

Lesson 13.1 The Free Enterprise System


2Chapter 13 Our Economic System

The Free Enterprise SystemThe Free Enterprise System

DiscoverDiscover

The meaning of free enterprise

How the free enterprise system works

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DiscoverDiscover

How you fit into our economic system



Why It’s ImportantWhy It’s Important

The more you understand about our economy, the better your chances are of reaching your career goals.



Key TermsKey Terms

economicseconomic systemcapitalismfree enterpriseregulatecommand economy

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Key TermsKey Terms

socialist economyconsumersproducersprofitsupplydemand




What do you know about how the prices for goods and services are set?

Do you understand why prices rise or fall?



Economic SystemsEconomic Systems

Economics is the study of how people produce, distribute, and use goods and services.




Producing means creating good or services.

Distributing means making goods and services available to the people who need them.




Using is what people do with goods and services.




An economic system is a country’s way of making choices about how to use its resources to produce and distribute goods and services.




The economic system of the United States is known as capitalism.

Capitalism is also known as a market economy or free enterprise system.




Free enterprise means that individuals or businesses may buy and sell goods and services and set prices with little government control.




The government passes laws to regulate, or set rules for, some prices and wages.

Laws passed by the government protect everyone who buys and uses goods and services.



Other Economic SystemsOther Economic Systems

In a command economy, the government makes all of the key economic decisions.

In a command economy, there is little economic freedom and little incentive to increase productivity.



Other Economic SystemsOther Economic Systems

In a socialist economy, there is private enterprise, but the government controls key industries and makes many economic decisions.



How the U.S. Economy WorksHow the U.S. Economy Works

People who buy and use goods and services are consumers.

Every time consumers make a purchase, they are “voting” with their dollars.



The Producer’s Goal: Making a ProfitThe Producer’s Goal: Making a Profit

Producers and consumers have very different goals.

Producers try to make goods or provide services that consumers will buy.



The Producer’s Goal: Making a ProfitThe Producer’s Goal: Making a Profit

All businesses must earn a profit to keep operating.

A profit is the amount of money left after the business pays its expenses.



Q and AQ and A

I don’t want to work for a business whose main goal is making a profit. Am I a misfit?

I don’t want to work for a business whose main goal is making a profit. Am I a misfit?

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Q and AQ and A

Perhaps a job in a nonprofit organization would be perfect for you.

Some nonprofit organizations exist to serve charitable causes.

Perhaps a job in a nonprofit organization would be perfect for you.

Some nonprofit organizations exist to serve charitable causes.



The Pattern of the EconomyThe Pattern of the EconomyGraphic OrganizerGraphic Organizer

Pay wages and salaries from profit

earned

Provide goods and services to consumers

Provide labor and skills

Spend money for goods and

services

Business and Industry

People



Factors That Affect PricesFactors That Affect Prices

A consumer’s main goal is to get the most for his or her money.

Consumers note changes in prices and compare prices.



Factors That Cause Prices to ChangeFactors That Cause Prices to ChangeGraphic OrganizerGraphic Organizer

Supply and Supply and DemandDemand

Production Production CostsCosts CompetitionCompetition

Supply is the amount of goods and services available for sale.

The more it costs to make a good or provide a service, the higher its price.

When producers offer similar goods or services for sale, they are in competition.

Demand is the amount of goods and services that consumers want to buy.

Producers must sell their goods or services for more than it costs to produce them.

When competition is great, prices are lower. When there is little competition, prices are higher.



The Big PictureThe Big Picture

The global economy links the free enterprise system of the United States to all the other economic systems of the world.

You already have a role in the global economy.



Try This ActivityTry This Activity

Knowing the similarities and differences between our economy and the economies of other countries will help you compare employment opportunities in our free enterprise system to those available in the international job market.

Knowing the similarities and differences between our economy and the economies of other countries will help you compare employment opportunities in our free enterprise system to those available in the international job market.

Evaluate International Career Opportunities


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Try This ActivityTry This Activity

Create a Venn Diagram Prepare a Venn diagram comparing and contrasting the employment opportunities in the U.S. free enterprise system to those in the economic system of another country.

Create a Venn Diagram Prepare a Venn diagram comparing and contrasting the employment opportunities in the U.S. free enterprise system to those in the economic system of another country.





Why does the government regulate prices and wages?

So that businesses can’t develop monopolies, charge excessive prices to consumers, pay less than the minimum wage, and refuse to pay overtime.

Why does the government regulate prices and wages?

So that businesses can’t develop monopolies, charge excessive prices to consumers, pay less than the minimum wage, and refuse to pay overtime.

Critical Thinking Review

Critical ThinkingCritical Thinking

QQ

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AA



What happens to prices when supply is greater than demand? When demand is greater than supply? Explain why this happens.

What happens to prices when supply is greater than demand? When demand is greater than supply? Explain why this happens.



QQ

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Prices go down when supply is greater than demand because producers have an excess amount of goods or services available; prices go up when demand is greater than supply because consumers want more goods or services than are available for sale.

Prices go down when supply is greater than demand because producers have an excess amount of goods or services available; prices go up when demand is greater than supply because consumers want more goods or services than are available for sale.



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AA



Why would workers in a command economy have less incentive to be productive than workers in the free enterprise system?

Why would workers in a command economy have less incentive to be productive than workers in the free enterprise system?



QQ

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Workers in a command economy always have a job and get paid regardless of their productivity. Even if they are more productive, they will not earn more money nor will they necessarily be promoted. Workers in the free enterprise system must be productive to keep their jobs, earn more money, and advance in their careers.

Workers in a command economy always have a job and get paid regardless of their productivity. Even if they are more productive, they will not earn more money nor will they necessarily be promoted. Workers in the free enterprise system must be productive to keep their jobs, earn more money, and advance in their careers.



AA

End of Chapter 13Our Economic System

End of Chapter 13Our Economic System



Chapter 13 Our Economic System Chapter 13 Our Economic System Lesson 13.1 The Free Enterprise System...

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