Do Now Free Market Answer the following in

Do Now: Free Market Answer the following in 3 -5 complete sentences: Write everything you can about a free market economy. You may look at your notes on economic systems if needed….

Announcements Unit 1 Exam: Tuesday 1/31 Study guide due the day of the exam Write the definition and/or significance of each term

Free Market Economy Objective: Analyze key features of a free market economy.

Free Enterprise Free Enterprise: an economic system in which individuals own most, if not all, the resources and control their use. Government plays only a small part in the economy Synonyms: Capitalism & Market Economy Supported by six social and legal pillars

Adam Smith Wrote: The Wealth of Nations (1776) The Invisible Hand Natural phenomenon that regulates free markets through competition Self-interest causes people to work hard and take risks, which benefits society 1723 – 1790 Scotland Competition keeps prices down and quality up

6 Pillars of Free Enterprise Private Property Private property: any good that is owned by an individual or a business Public property: any good that is owned by the government The right to own private property is not absolute Eminent Domain = right of gov. to take private property for public use (with compensation) 90% privately owned

6 Pillars of Free Enterprise Specialization Focus on producing one product Job Specialization Desirable Transferable

6 Pillars of Free Enterprise Voluntary Exchange People must buy and sell products to acquire what they want Individuals have the right to make exchanges or trades they believe will make them better off

6 Pillars of Free Enterprise Market Competition among businesses to get resources and sell products (rivalry) No person or law can stop you from competing with others Sellers will compete for your dollars – consumers will benefit Competition as a worker – Ways to be competitive: work experience, education levels, networking

6 Pillars of Free Enterprise Price System Using monetary prices to facilitate exchange Prices set naturally

6 Pillars of Free Enterprise Entrepreneurship Motivation that drives business leaders to compete Economic Incentives

Goals of the US Economic System Full employment Economic growth Price stability Economic freedom Economic security Economic equality Efficiency

Illustrated Dictionary: Free Market Illustrate the definitions for the following terms: Invisible Hand Private property Specialization Voluntary Exchange Market competition Price system Entrepreneurship

Scenarios Read the scenario Claim if the scenario demonstrates free market If it does: identify which pillar is demonstrated in the scenario and explain how If it does not: identify a pillar and explain how it is not supported in the scenario

Review What is Free Enterprise? Who is Adam Smith? What book did he write? When did he write it? What are the 6 pillars of Free Enterprise? Private Property Specialization Voluntary Exchange Price System Competition Entrepreneurship