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Capitalism and Free Enterprise

Learn about the characteristics of capitalism and free enterprise, such as economic freedom, voluntary exchange, private property, profit motive, the role of the entrepreneur, consumer sovereignty, and government's role as a protector, provider, regulator, and promoter.

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Capitalism and Free Enterprise

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  1. Capitalism and Free Enterprise • Market economy is based on capitalism • Capitalism thrives on competition • Free enterprise is another term to describe US economy • Competition is allowed to flourish

  2. Characteristics of Capitalism • Economic Freedom • People can chose their occupation and what to buy • Businesses can decide what to produce and how much • Voluntary Exchange • Buyers and sellers exchange freely in market transactions

  3. Characteristics of Capitalism • Private Property • People control their possessions as they wish • Profit Motive • People risk their money to gain more money • Profit – extent to which persons or organizations are better off than they were before a transaction

  4. The Role of the Entrepreneur • Manage land, labor, and capital • Many will fail • But dream of success helps ignore failure • If an entrepreneur is profitable, it attracts more people to that industry

  5. The Role of the Consumer • Hold power in the economy • If they buy, producers will produce • Consumer sovereignty • Wants change as they are exposed to more products

  6. The Role of Government • 4 Roles • 1. Protector • Laws protect consumers • Prohibits abusing freedoms • 2. Provider and Consumer • Provide goods and services • 3. Regulator • Preserves competition • Promoter of National Goals • US operates under a modified private enterprise economy • people are economically free, but government intervenes and regulates

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