8 2 The Free Enterprise System The Enterprise
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8. 2 The Free Enterprise System
The Enterprise System The United States economy is a mixed market economy. n Free Enterprise System- works by allowing producers and consumers to produce what they want. n Goal of Consumers: To buy the goods they want/need at as low a cost as possible. n Goal of Producers: To sell the good they produce so as to make as much profit as possible.
Effects of The Free Enterprise System This system produces several things, such as: Increased Productivity and Efficiency 2. Encouraging. Technological Inventions and Innovations 3. Encouraging Specialization and Division of Labor 1. Increased Productivity and Efficiency 4. And Encouraging The Ownership of Private Propertyare motivated to increase their productivity since • Producers 1. producers stand to make more profit. • They are forever seeking more efficient means of production
Effects 2. Encouraging Technological Inventions and Innovations n n 3. Encouraging Specialization and Division of Labor n n 4. Inventions- new productions that perform a task that no product could before perform. Innovations- any inventions or change in process that improves something greatly. Specialization- focusing on the outcome of a particular task rather than trying to master it. Division of Labor- splitting up work into smaller and more specific tasks Encouraging Increasing Productivity and Efficiency § To produce goods and services that are in demand producers must be able to achieve and own the means necessary to manufacture them.
Government's Role in the U. S Free Enterprise System The Government’s role in the economy is very limited; It allows the market to determine what will be produced and at the price it will be sold. n Patent- guaranteed ownership and control of an invention, or innovation for a specific time. n Copyright- the legal right granted to a writer, musician, or artist to protect their work for their lifetime.
Disadvantages of the U. S Free Enterprise System n Most people will agree that the United States is the strongest and most impressive economic system in the world. However, It has its disadvantages. Such as: 1. 2. For one, Since the market makes the decisions the economy is offered less security. Command Markets normally guarantee full employment because jobs are government assigned.