JA EconomicsChapter 2
Free Enterprise Free to make choices
Make the choice they believe offer them the most benefits
Gets it’s strength and support from 6 pillars
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FREE ENTERPRISE
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Private Property Resource/product owned by individuals
or businesses
Protected by the U.S. constitution
Businesses have an incentive to maintain their property
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FREE ENTERPRISE
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Specialization Businesses and people
One product or a few parts of one product
Contributes to higher wages and profits
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Voluntary Exchange Because of specialization
No one person or business makes one entire product
Everyone is dependent on other people
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The Price System Buyers and sellers look towards the
price to send them a message
Provides incentives
Businesses have a desire to make a profit
Page 18-19
The Price System Price doesn’t determine all economic
behavior
Values Charity Opportunity Convenience, service, loyalty, quality etc
Page 18-19
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ET C
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PETIT
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Market Competition Define Market
Resources
Products
Scarcity
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FREE ENTERPRISE
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Entrepreneurship Helps the economy grow and change
Three characteristics of an entrepreneur Innovative thinking Management skills Risk taker
Page 15 in the study guide
Page 21
Economic Systems Market system (free enterprise)
Command system
Traditional system
Mixed – no pure form
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Economic Models Represent the real world
Descriptive, predictive and ideal
Want-satisfaction chain in chapter 1
The circular flow of money, resources and products.
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Goods and S
ervice
s Goods and Services
Resources Reso
urce
s
households
MarketG & S
Market
Resources
Production
Circular flow of money How it grows
How it shrinks
Adam Smith Born in Scotland in 1723
University of Glasgow at age 14
Economy evolved People traded with once another
Adam Smith Born in Scotland in 1723
University of Glasgow at age 14
Economy evolved People traded with once another