Goal: Identify the Legal Rights
that Protect America's Free
Enterprise System
Legal Rights in the U.S Free Enterprise System
(Capitalism)
Open Opportunity- is the ability of everyone to enter
and compete in the marketplace of his or her free
choice.
Legal Equality- is a situation in which everyone has the
same economic rights under law
-everyone has the rights to succeed or fail in the
marketplace
Free Contract- is a situation in which people decide
which legal agreements to enter into.
-Contracts include business partnerships, jobs,
purchase agreements
Goal: Discover the Role of Producers and Consumers
in U.S Free Enterprise System 10-19-11
Producers: Look to earn the most profits from their
transactions
Profit Motive- motivates people to start new business
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Profit Motive- motivates people to start new business
and gives people incentive to improve their current
business
Consumers: "Vote" with their wallets
-When consumers choose to purchase a product they
are "voting" for their choice against competing
products.
Example: Low Carb High Protein Diet
High-carb Food Sales went Down, Low-Carb Food Sales
went Up
Goal: Learn Government's Role in the U.S. Economy
Video: Government in the Circular Flow Model
1. Provide Public Goods
Public Goods- are products provided by federal, state,
and local governments and consumed by the public as
a group
Examples: highways, mass transit, power, water,
sewer systems, education, health care, police and fire
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2. Manage Externalities
An externality is a side effect of a transaction that
affects someone other than the producer or the buyer
A negative externality is an externality that has a
negative effect, or cost, for people not involved in the
original economic activity.
Example: Pollution
It is governments role to limit negative externalities
and tax or fine the power plant for polluting.
3. Manage Transfer Payments
Transfer Payment- transfer income from one person or
group to another with the receiver not providing
anything in return
Public Transfer Payment- is a transfer payment in
which government transfers income from tax payers to
recipients who do not provide anything in return.
Examples: Social Security, Welfare, Medicare,
Medicaid, Food Stamps, Unemployment
Exit Question: What are the three major roles of
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government in the U.S. free enterprise system?
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