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GROWTH• The US stock market has always grown over a 10 year
period. However, the type of TOP industries has changed considerably.
• The chart below shows samples of the largest 100 U.S. companies. (Primary v. Secondary v. Tertiary)
CAPITALISM & FREE ENTERPRISE
–Capitalism: Private citizens control the factors of production
–Free enterprise: Competition w/o interference
ECONOMIC FREEDOM•Main idea—people and businesses can
do what they want (work/shop/sell/etc.) when and where they want
•On a scale of 1-100, how much economic freedom do people actually have?
•Who in society has the MOST freedom? Why?
2008 Index of “Economic Freedom”
http://www.heritage.org/index/countries.cfm
PRIVATE PROPERTY• Examples?• “Private property gives people the incentive to
work, save, and invest.” (p. 48) – True or False?
• The fact that people own goods such as cars, watches, and furniture is not really controversial. However, ownership of LAND can be quite controversial. How?
• Which is better—private or public ownership of land?
• Do people that own land tend to think in the long-term or the short-term?– Mr. Patel– Others
Profit and Profit Motive• Does profit mean
“money earned”?
• Let’s name some effects of profit motive?– On goods and
services– On workers– On the environment– On Standard of living
“When an entrepreneur is successful, everybody benefits.” p. 49
–Here’s why!• Entrepreneur gets profits, a growing business, and the
satisfaction of a job well done.
• Workers are rewarded with more and better-paying jobs.
• Consumers are rewarded with new and better products.
• The government is rewarded with a higher level of economic activity and larger tax receipts which can be used to build roads, schools, and libraries for people not even connected with the original entrepreneur.
• Successful entrepreneurs attract other firms to the industry who try to “grab a share” of the profit. To remain competitive, the original entrepreneur may have to improve the quality or cut prices which means that the customer can buy more for less.
Role #2: Consumer–How are dollars/won/etc. seen as
economic “votes?”• Key concept: Consumer sovereignty• Why are consumers considered the most important of the 3
roles in a free market society?• “The customer is always right”
–True or False: Consumers’ wants constantly change.
• Today, more Americans purchase home computers than tvs though computers were barely known just 20 years ago.
• Recent successes: SUVs, home video games, pcs• Recent failures: “New coke,” Celery flavored Jell-O, etc.
Role #3: The Good Ole Ye Ole
Government• Role of the Government
– Protector (against what?)• False/misleading ads, unsafe food/drugs, environmental hazards, unsafe automobiles, discrimination• Drug dilemma/FDA
– http://www.jewishworldreview.com/0605/stossel060805.php3 (defnition: Snake Oil salesman)
– Provider & Consumer (of what?)• Defense services• Education/Public welfare• Parks, libraries, public transportation• Gov’t becomes a large CONSUMER in order to PROVIDE
– Regulator (of what?)• Preserving competition• Directly oversees some industries such as banking & nuclear power• Also regulates communications, insurance rates, building/zoning ordinances• Most controversial of the roles
– Promoter of National Goals • Not really important
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