Roles of the Entrepreneur, the Consumer & the Government

10 Richest People in the World • No. 1: Carlos Slim Helú

• $74 billion | Telecom | Mexico

• No. 2: Bill Gates

• $56 billion | Microsoft | U.S.

• No. 3: Warren Buffett

• $50 billion | Berkshire Hathaway| U.S.

• No. 4: Bernard Arnault

• $41 billion | LVMH | France

• No. 5: Larry Ellison

• $39.5 billion | Oracle | U.S.

• No. 6: Lakshmi Mittal • $31.1 billion | Steel | India

• No. 7: Amancio Ortega • $31 billion | Zara | Spain

• No. 8: Eike Batista • $30 billion | Mining, Oil | Brazil

• No. 9: Mukesh Ambani • $27 billion | Petrochemicals | India

• No. 10: Li Ka-Shing • $26 billion | Diversified | Hong Kong

• No. 14: Christy Walton & family • $26.5 billion | Wal-Mart | U.S.

Role of the Entrepreneur

• Organizes and manages land, capital and labor in order to make a profit.

• Want to “be their own boss”

• Willing to risk everything to make their dreams come true.

Entrepreneurs Success Benefits All

• Workers are rewarded with more and better paying jobs.

• Consumers are rewarded with new and better products.

• The government is rewarded with higher tax revenue to build bridges, roads, schools and libraries.

Role of the Consumer

• If consumers like a product, it will sell and the producer will be rewarded for his efforts.

• If consumers reject a product and refuse to purchase it, the entrepreneur may go out of business.

• Consumer sovereignty = Ruler of the market

• “the customer is always right”

Market Failures

• New Coke

• Celery flavored Jell-O

• Chewable toothpaste in tablet form

• Bacon you cook in the toaster

• Chevy Nova in Spanish no va = “it doesn’t go”

Role of the Government

• Protector

• Provider of goods and services

• Consumer

• Regulator

• Promoter of national goals

Protector

• The U.S. government enforces laws against false and misleading advertising, unsafe food and drugs, environmental hazards and unsafe cars.

• It protects property rights, enforces contracts and tries to make sure everyone follows the “rules of the game” to ensure an efficient and fair economy.

Provider

• All levels of government provide goods and services for citizens.

• National government = Defense

• State Government = Education

• Local Government = Buses, Libraries, Parks

Consumer

• In the process of providing for its citizens, the government consumes factors of production (C E L L ) just like any other business.

• The government is the second largest consuming unit in the U.S. economy (the largest is the consumer unit).

Regulator

• National Government = preserving competition in the marketplace (no monopolies), oversees interstate commerce, communications, banking and nuclear power.

• State Government = Regulate insurance rates and car licensing and registration.

• Local Government = Building & Zoning permits

Promoter of National Goals

• Government reflects the will of the majority of its people. As a result, many government functions reflect people’s desire to modify the economic system to achieve their goals.

• Social Security, Child Labor Laws and minimum wage are examples of how Americans have modified their free enterprise economy.

Mixed Economy

• The United States has a mixed economy because it has elements of socialism in it.

• In a mixed economy people carry on their economic affairs freely, but are subject to some government intervention and regulation.