capitalism & economic freedom under capitalism, the basic economic decisions are made through...
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Capitalism & Economic Freedom
•Under capitalism, the basic economic decisions are made through the free interaction of individuals looking out for their own best interests.
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Capitalism• Private citizens own the factors of production.
Free Enterprise• Competition and minimal government
interference. Economic freedom Voluntary exchange Private property rights Profit motive Competition
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Economic Freedom• Rights to choose for both the consumer and
the producer.
Voluntary Exchange• Buyers and sellers engage freely in the
marketplace.• Both buyer and seller are better off after the
transaction.• Both believe that what they have obtained is
more valuable than what they had given up.
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Private Property
• People own and control their possessions.• Can be tangible (car) or intangible (skills).• Freedom to do as you wish as long as it
does not violate the rights of others.• Serves as an incentive for hard work.
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Profit Motive• People will risk their wealth if they are
rewarded by the possibility of earning a profit.
• Profit involves being better off at the end of a transaction than you were before it.
• Profit Motive encourages people to take risks and improve their well-being.
Entrepreneurs
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Competition
• Capitalism is fueled by competitionSellers attract consumers with lower
costsBuyers look to find better products at
lower prices
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The Entrepreneur• Organizes and manages the factors of
production• Sparkplug and catalyst
When they are successful, we all benefit
Leads to more competition, new products, better quality, lower prices, etc.
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The Consumer• Consumer sovereignty – Ruler of the
market• Determine what products are to be
producedOpinions and attitudes are always
changing
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The Government• Protector• Provider• Consumer• Regulator• Promoter – Mixed Economy