Free Enterprise

by Claire Y. and Austin A.

Definition

an economic system where businesses are privately owned and compete with each other in the marketplace, and the government has little control


Private Property

any good owned by individual or business, as opposed to being owned by the government


  • Land
  • Buildings
  • Copyrights


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Choice

buyers, sellers, workers, and investors


  • Buyer - People who want doughnuts
  • Seller - Krispy Kreme Doughnut Corporation
  • Worker - Factory workers, distributors, store employees
  • Investor - Shareholders who buy stock investing in the corporation


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Voluntary Exchange

exchanging what you value less for what you value more


  • Exchanging 100 pennies for 1 dollar bill
  • Exchanging money for weekly groceries
  • Exchanging money for part of a company (loans for stocks)


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Competition

competing in the economy for better products, prices, wages, and skillsets


  • Working at Subway instead of McDonald's for higher wages
  • Selling generic brand products at a lower cost than name brand products
  • Clothing stores compete for better fashion/fit at lowest price (Ross, Marshalls)


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Economic Incentive

reasons why people do (or do not) work


  • Teenagers work part-time for pocket money or other wants
  • Parents work to provide food, shelter, and other necessities for their families
  • People who inherit money or property from past generations may have little incentive to work for their wants/needs


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Relation to the Real World

feat. McDonald's

Private Property - McDonald's is a private corporation and operates outside of the government.
Choice - People make the decision to eat there because of taste, convenience, etc.

Voluntary Exchange - McDonald's pays money for ingredients, customers pay money for cheap meals.
Competition - McDonald's competes with other fast food restaurants by offering products exclusive to their company (Happy Meals, dollar menu). Some restaurants have playgrounds to appeal to children.

Economic Incentive - Everything is for profit.