Chapter 3The Free Enterprise System

Section 3.2Government and Consumer Functions

What You’ll Learn

The roles government plays in our free enterprise system

The supply and demand theory

The Role of Government

The government plays four roles in our free enterprise system.

1. Provider of Services2. Supporter of Business3. Regulator

▪ Consumer and Worker Protection▪ Business Protection

4. Competitor ▪ Examples: Tennessee Valley Authority (TVA), U.S.

Postal Service, Amtrak

The Role of the Consumer

Deciding Which Businesses Survive▪ The U.S. is known as a consumer-oriented

society.▪ Consumers have the power to decide which

products will be produced and which companies will stay in business.

Determining Prices Supply and Demand Theory▪ Surpluses ▪ Shortages▪ Equilibrium