Description Individuals right to choose their occupation and what to buy. Firms right to hire or produce.

Transcription

1 Name Flow Chart American Free Enterprise, pgs American Free Enterprise Economic Freedom Competition Private Property Rights Self-Interest Voluntary Exchange Profit Motive Description Individuals right to choose their occupation and what to buy. Firms right to hire or produce. Description Description Description Description Description Examples 1. I had the freedom to become a teacher and a coach; I can buy whatever I want. 2. Firms range from automakers to fast food Examples Examples Examples Examples Examples

2 Economic Freedom Description - Individuals right to choose your occupation and what to buy. Firms right to hire or produce. The right to conduct yourself with little government interference. Examples: 1. I had the freedom to become a teacher and a coach; I can buy whatever I want. 2. Firms range from automakers to fast food.

3 Competition Description - Competition is the rivalry among sellers to attract customers while lowering costs. Lower prices, more variety and quality of products. Examples: Mcdonalds vs. Burger King Walmart vs. Target

4 Private Property Rights Description Individuals and businesses have the right to buy and sell as much property as they want Property owners can prohibit others from using their property The fifth amendment protects us from the federal or state governments taking our property for their own use. Examples: Households and firms are encouraged to own property and enjoy the protection of the property Firms can own and operate their business with limited interference from the government

5 Self - Interest Description - Households and firms make decisions in their best interest Self-interests benefits the entire well-being of society. Examples: I recently purchased food from Publix, which satisfied my needs I worked as a summer school teacher to help increase my pay

6 Voluntary Exchange When individuals willingly engage in a transaction where both parties benefit. Allows people to decide what and when they want to buy and sell, rather than forcing them to buy and sell at particular times or specific prices Examples: When I get a haircut, I get a fresh look, Sportsclips gets my money When I buy gasoline, I get energy for my car, the firm gets my money

7 Profit Motive The force that encourages people and organizations to improve their material well-being Examples Many people in our society are driven by the desire to make money, which ultimately benefits the market People in the U.S. are rewarded for innovations and efficiency via cash incentives

8 Bumper sticker and Political Cartoon Assignment Draw 2 political cartoons that relate to American Free Enterprise. Design 2 bumper stickers relating to the A.F.E. Requirements: You must use all 6 characteristics within your cartoons and bumper stickers. Characteristics Economic Freedom, Competition, Private Property Rights, Self- Interest, Voluntary Exchange, Profit Motive

9 Role of the Consumer Consumer Sovereignty - in a free market, consumers determine the goods that are produced; this makes them "sovereign" over production in an economy. Consumers have the right to make their own choices, in free enterprise system. When consumers buy products, they signal to producers what to make and how much.

10 Role of the Government Government acts a informer, protector, and regulator Government has the responsibility to protect property rights, contracts and other business activities

11 Role of the Government as Informer Role of the Government as Informer: Make sure that producers provide consumers with information Consumers use govt. info. to protect themselves from dangerous products and fraudulent claims. Educated consumers make the free market system work more efficiently Public disclosure laws require companies to give consumers important info about their products.

12 Role of Government as Protector Role of government as a protector: Federal and state agencies regulate industries whose goods and services affect the well-being of the public. Though they do not control it, they impose various restrictions on the private market Gas stations, must dispose of used motor oil properly Zoning laws, prevent homeowners from running businesses out of their homes

13 Negative Effects of Regulation Government regulation can have negative effects on businesses and consumers Negative effects: 1. Government rules can increase the cost of business 2. Stifled competition can lead to high prices 3. Increase of governmental spending can lead to higher taxes

14 Public and Private Sector Public sector- the part of the economy that involves the transactions of the government Private sector- the part of the economy that involves the transactions of individuals and businesses

15 Public Goods Public Good - A shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers. Military, National Park, Snow Removal, Fireman, Schools

16 Free-Rider Problem A free rider is someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway if it were provided as a public good

17 Market Failure The market, on its own, does not distribute resources efficiently, choices made by individuals determine what goods get made, how, and how much Free riders, monopoly, roads and bridges in a sparsely populated area, etc.

18 Externalities Is an economic side effect of a produced good or service by someone other than the person deciding how much to produce or consume

19 Negative Externalities Negative Externality negative effects experienced by people that had no part in the consumption of a good or service Cigarette smoker, chemical waste dumping, foreclosures and property values, etc.

20 Positive Externalities Goods/services that generate benefits to many people, not just those who pay for the goods Education, better technology, medicine, etc.

21 Technology the Private Sector How can we experience a shift in the PPF outward? Technology the process used to produce a good or service Improvements in technology allow economies to produce more output from a smaller amount of inputs. Farming equipment, light bulb, computers, etc.

22 Productivity Productivity a measure of output from a production process, per unit of input. 1 worker sew 2 shirts in an hour 1 textile machine can produce 50 shirts in an hour Productivity can be increased by improved work ethic or by increased technology. Increased technology, better work ethic, healthy workers, educated workers, trained workers

23 Chapter 3 Section 4 Daily Assignment Questions pgs Define poverty threshold. 2. What was the poverty threshold in 2002? 3. Describe the welfare system 4. Define cash transfer and describe each of the following cash transfers: 1. Temporary Assistance for Needy Families (TANF) 2. Social Security 3. Unemployment Insurance 4. Workers Compensation 5. Describe in-kind benefits. 6. What medical benefits are provided in the U.S.? 7. How is education provided in the U.S.? 8. What are faith-based initiatives?

24 Chapter 3 Section 4 Daily Assignment Questions pgs Poverty threshold is an income level below that which is needed to support families or households. 2. Established in the 1930s, the government welfare plan collects taxes from individuals, then redistributes them to others. Government aid for the poor.

25 Chapter 3 Section 4 Daily Assignment Questions pgs Cash transfers are direct payments of money to poor, disabled, and retired people. 4. Cash Transfers Temporary Assistance for Needy Families TANF replaced the AFDC discontinued direct federal welfare; sends money to states, which design and run their programs. Social Security created in 1935, provides cash transfers of retirement income to the elderly and disabled. Takes payroll taxes from current workers and redistributes them to current recipients Unemployment Insurance Unemployment checks provide money to eligible workers who have lost their jobs through no fault of their own Workers Compensation pays injured workers money for the lost wages they have endured as a result of their injuries

26 Chapter 3 Section 4 Daily Assignment Questions pgs In-kind benefits are goods and services that are provided for free or at greatly reduced prices. Food stamps, subsidized housing, legal aids, etc. 6. Medical benefits provided in the united states are based on categories such as health insurance for the elderly, disabled, and poor Medicare covers Americans over 65, as well as the disabled Medicaid covers poor who are unemployed or not covered by employers insurance plans 7. Federal, state, and local governments all provide educational opportunities. Education programs add to a nation s human capital and labor productivity. 8. President Bush challenged faith-based initiatives (charities, community groups, churches) to assist people in need. Traditionally, shown the ability to save and change lives.

27 Cost and Benefits The government decides if the benefits of a policy will outweigh the drawbacks When a good or service is public, 1. The benefit to each individual is less than the cost that each would have to pay if it were provided privately 2. The total benefits to society are greater that the total cost

28 Chapter 3 Section 3/4 Daily Assignment Questions pgs What is a public good (pg. 62)? 2. What are the public goods provided on page 63? 3. What are two determinants in the cost benefit analysis of producing public goods and services? 4. What is the difference between public and private sector? 5. Describe the free-rider problem and market failure. 6. Define externality and provide an example of positive and negative externalities. 7. Define poverty threshold. 8. What was the poverty threshold in 2002? 9. Describe the welfare system 10. Define cash transfer and describe each of the following cash transfers: 1. Temporary Assistance for Needy Families (TANF) 2. Social Security 3. Unemployment Insurance 4. Workers Compensation 11. Describe in-kind benefits. 12. What medical benefits are provided in the U.S.? 13. How is education provided in the U.S.? 14. What are faith-based initiatives?

29 Open Opportunity The concept that everyone can compete in the marketplace. Allows economic mobility up or down; no matter how much money you start with, you can end up wealthier or poorer, depending on how well a business performs

30 The Poverty Problem Poverty threshold- an income level below that which is needed to support families or households

31 Government Role Provide a safely net, raise the standard of living, and level of economic wellbeing as measured by the ability to purchase goods and services they need

32 The Welfare System Welfare general term that refers to govt. aid for the poor. In the 70s and 80s the welfare payments soared, but in the 90s Congress changed the system.

33 Cash Transfers Cash transfers- direct payments of money to eligible poor people Temporary assistance for needy families- gives money to the states, which run welfare programs Social security- provides cash transfers of retirement income to the elderly Unemployment insurance- provide money to eligible workers who have lost their jobs Workers compensation- cash transfer to workers injured on the job

34 In-Kind Benefits, Medical Benefits, Education, Faith-Based Initiatives In-kind benefits- goods and services provided for free or at greatly reduced prices Medical benefits- Medicare covers citizens over 65 and the disabled; Medicaid covers poor people or those not covered by their employers insurance plans Education- federal government funds programs from preschool to college, state governments aid students with learning disabilities Faith-based initiatives- religious organizations often are successful with delivering social services Access to education is provided by the government.

35 Daily Assignment Questions Ch. 3 Free Enterprise Case Studies Answer the Questions Below: Page 71 Government and the Interstate Highway System 1. What were the condition of roads in the 19 th century? 2. How did the bicycling craze affect the national highway system? 3. What did Congress begin to do in the early 1900s? 4. What did the Federal Highway Act of 1921 accomplish? Page 165 Profile Bill Gates 1. What gave Microsoft a competitive edge in the market for software? 2. Why was Microsoft forced to defend itself in federal court in 1997? Page 177 Regulating Cable Television 1. Which federal agency oversees the cable industry? 2. How did the FCC change from the 1950s to the 1960s? 3. What happened in the 1980s as a result of deregulation? 4. What did the Cable Television Consumer Protection Act of 1992 state?

36 1. Property Rights 2. Profit Motive 3. Voluntary Exchange 4. Consumer Sovereignty 5. Public Goods 6. Public Sector 7. Private Sector 8. Free Rider 9. Externalities 10. Welfare Chapter 3 VIS Terms

37 Essential Question # What role does the government play in the United States modified free enterprise? Informer provides information about products and firms Protector protects private property rights Regulator oversees the market to ensure competition exists Resolves market failures and provides public goods. 2. How can government regulation have negative effects on the market? Unintended consequences Stifle competition (patents, copyrights, government monopolies) Increased taxation Increase the cost of business FDA mandate to have childproof medicine leads to an increase in child poisonings.

38 Major Regulatory Agencies Agency Year Created Full Name Role FDA FTC FCC FAA EEOC EPA OSHA CPSC NRC 1906 Food and Drug Administration Sets, enforces standards for food, drugs and cosmetic products 1914 Federal Trade Commission Enacts and enforces antitrust laws to protect consumers. Regulates interstate/international 1934 Federal Communications communications by radio, television, Commission wire, satellite, and cable Federal Aviation Administration Regulates civil aviation, air-traffic and piloting standards and commerce Equal Employment Opportunity Commission Promotes equal job opportunity through enforcement of civil rights laws, education, etc Environmental Protection Agency Enacts policies to protect human health and the natural environment Occupational Safety and Health Administration Consumer Product Safety Commission Nuclear Regulatory Commission Enacts policies to save lives, prevent injuries, and protect health of workers Enacts policies for reducing risks of harm from consumer products Regulates civilian use of nuclear products