The Free Enterprise System

As Americans, What Freedoms Do We Have?

Speech Religion AssemblyWhat else?

Free Enterprise SystemWe are free to own property and start a

business in an economy based on the free enterprise system.

What is an Economy? An economy is a system for producing

and distributing goods and services.

What are Goods? Goods are THINGS you can buy, like

shoes, soccer balls and CDs. What are some other goods?

What is a Service? Service is WORK that people do for

others. Hair stylists, plumbers and doctors sell their services. Can you name others?

O.K.…back to Free Enterprise You can decide what product you’ll sell

and how much money to charge for it.

Free EnterpriseThe United States operates in a free

enterprise system. In a free enterprise system, businesses sell their goods and services in MARKET ECONOMY.

Market EconomyA market economy is

one in which business owners and customers make decisions about what they make, buy, and sell.

Traditional Economy A traditional economy is

one based on customs, beliefs, habits and traditions that have been carried on in a society over time.

Command EconomyA command economy is

one in which the government controls the factors of production and decides what and how much will be produced, and who can sell it.

Factors of Production Natural Resources Capital Labor Entrepreneurs

Natural Resources

Labor

Capital

Capital Goods

EntrepreneursPeople who start

businesses in a free enterprise system.

Types of Economic ActivitiesIndustries can be divided

into four groups: Primary Industries

Secondary Industries

Tertiary Industries

Quaternary Industries

Primary IndustriesPrimary Industries

involve natural resources or raw materials. Examples of primary industries are: farming, mining, logging

Secondary IndustriesSecondary industries

change raw materials into finished products. Examples are: sawmills making lumber, making copper wire, making orange juice.

Tertiary IndustriesTertiary industries handle

goods that are ready to be sold to consumers. Stores, banks, insurance companies, and government agencies are examples of tertiary industries.

Quaternary Industry

Quaternary industries are those parts of the economy concerned with research, the gathering of information and administration. They are a specialized part of the tertiary sector of the economy.

Economic DevelopmentCountries can be divided into two categories:

Developed – Countries that have strong primary, secondary, tertiary, and quaternary industries. These countries have citizens who have high literacy rates, large urban populations, have good health care systems, and access to telecommunication systems.

Economic DevelopmentDeveloping Countries – These are countries

moving toward development. They often have large rural populations or many people who work in primary industries. They have low literacy rates, poor health care systems, and low rates of employment.

What’s a Profit?Profit is the money a business has left after it has paid all its costs.

Your goal at Enterprise City will be to pay off your bank loan and make a profit.

What are Costs?Businesses must spend money on certain things.

TaxesRentAdvertisingSupplies

What’s Supply and Demand?Supply is how much of a product is available.

Demand is the amount of a product that people are willing to buy.

If LOTS of people want it, you can charge a higher price

If NOT MANY people want it, you’ll need to lower the price.

Benefits of Free Enterprise:Choice

You, the consumer, can choose from many different kinds of things to buy.

Benefits of Free Enterprise:Choice

Companies are free to choose the goods they wish to make.

Benefits of Free Enterprise:Profit and High Wages

Employees can seek the highest paying job for their work and entrepreneurs pursue ideas to make the most profit.

Benefits of Free Enterprise:Control

People rather than the government control the factors of production.

Benefits of Free Enterprise:Progress

The free enterprise system inspires people to invent things.

Remember Thomas Edison? His studio produced the first talking motion picture in 1912.

ScarcityThe availability of certain factors of

production can affect international trade and interdependence among societies.

ScarcityThink of the availability

of oil. Oil is a natural resource that is used in the production of many products.

Good Luck!

We hope you’ll make the most of your opportunities at

Enterprise City!