Chapter 19, Section 3Chapter 19, Section 3Capitalism and Free Capitalism and Free

EnterpriseEnterprise

Main Idea:Main Idea:

• The U.S. has a free enterprise system, or capitalistic system.

I. Features of Capitalism (434-437)

***U.S. Economy is built on capitalism and free enterprise.***

A. Capitalism- Citizens and owners control production.

B. Free Enterprise- Free competition between businesses!

C. Consumer Sovereignty- consumer is the ruler of the market, they determine what is produced.

*** Choice is key to capitalism!!! We have the right to work in whatever type of job we want, wherever we want!!!****

D. Private Property Rights- we are free to own, use, dispose of things that are ours as long as they don’t interfere with others!

E. Competition- Struggle between buyers and sellers to get the best products at LOW prices

*** Capitalism thrives off of competition***

***Profit- the money left over after all costs of production have been paid***

***Profit Motive- driving force behind the free enterprise system and capitalism***

II. The spread of capitalism (436-437)

A. Capitalism has developed gradually over hundreds of years.

B. Adam Smith

1. Scottish Economist

2. Author of Wealth of Nations

3. He scientifically described economics for the first time.

4. He believed that individuals seeking profit is beneficial to a society.

5. Laissez-faire- “To let alone”

***Laissez-faire Economics***

6. He believed government should not interfere with the market-place. Government’s job is to create free competition!

*** Many American Founders were influenced by Smith’s book!!!***

Mini Quiz!!!Mini Quiz!!!

1. Free enterprise is competition between businesses…..Is it good or bad?

2. What is profit?

3. Who is Adam Smith?

4. What is Laissez-faire Economics?

5. Who did Adam Smith influence?