DFS Trans 2
American Free Enterprise
Chapter 2 Section 3
Characteristics of Free Enterprise
Capitalism
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Capitalism – Private ownership of
resources
Free Enterprise – Unhindered use of
privately owned resources to make $$$$
Five Characteristics
Role of Entrepreneur
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Organize and manages: land, labor and
capital for Profit
Characteristics
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Want to be their own boss
Risk taker
High rate of failure
Sparkplug/ catalyst for economy
Most Successful
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Robert Johnson
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Bill Gates
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BET
Microsoft
Mary Kay Ash

Mary Kay Cosmetics
Role of Consumer

Consumers determine what is produced
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Consumer Sovereignty – “Customer is always Right”
Success – PS3, Blu-Ray, I-Pod
Failures – Crystal Pepsi, Celery flavored Jello,
HD Disc
Consumers demand constant improvement

Computers, I-pods, Cell Phones
Role of the Government
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Multiple Roles
Protector
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Enforces laws to protect consumers, employees,
environment, businesses
Provider
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Federal – Justice system/ National Defense
State – education, highways, and public welfare
Local – Parks, sanitation, transportation
Cont.
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Regulator
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Preserving the marketplace
Safety, Banking, Zoning,
Protect Consumers
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False advertising, FDA,
Consumer
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The ones using scarce resources
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US, Government, then private business
Modified Free Enterprise

Unintended Consequences of Government
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The emergence of a mixed or modified free
market economy
Private sector can not control everything
(Military)