Free Enterprise
In a free enterprise economy,
competition is key.
World Geography, Unit 04 Lesson 03
©2012, TESCCC
What is competition in a Free Market?
 Free Market- Also known as a Free Enterprise or
Capitalism, is an economic system that is based on private
ownership of the means of production and the creation of
goods or services for profit
 Competition- Rivalry between two or more businesses
striving for the same customer or market
 AT&T vs Verizon
 Walmart vs Target
 Dish vs Direct TV vs U-Verse
 Pepsi vs Coke
©2012, TESCCC
Means of Production
 The three inputs required for production are:
 labor (including human capital),
 land (i.e., natural resources, which exist prior to human beings)
and
 capital goods.
 Capitalism entails the private ownership of the latter two —
natural resources and capital goods — by a class of owners
called capitalists, either individually, collectively
©2012, TESCCC
Factors of Production
 A product is any good produced for exchange on a market.
A commodity refers to any good exchanged in a market,
but more solely products such as raw materials.
 There are two types of products:
 capital goods
 consumer goods
 Capital goods (i.e., raw materials, tools, industrial
machines, vehicles and factories) are used to produce
consumer goods (e.g., televisions, cars, computers,
houses) to be sold to others.
©2012, TESCCC
Explain how these
images demonstrate
competition and the
free enterprise
economic system.
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©2012, TESCCC
Life Without Competition
 Without our companies
engaging in competition,
some companies and
businesses would be
monopolies…
 Monopoly-To dominate
by excluding others;
Exclusive control by one
group of the means of
producing or selling a
commodity or service
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Free Enterprise
What exactly is a free enterprise
economy?
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Free Enterprise System
A market economy in which individuals
depend on supply, demand, and prices to
determine the answers to the four economic
questions of “what to produce,” “how to
produce,” “how much to produce,” and
“for whom to produce.” The system has
four characteristics: economic freedom,
voluntary exchange, private property, and
the profit motive.
©2012, TESCCC
Definitions
• Economic Freedom- The right of an individual or
corporation to buy, sell or trade goods; right to
pursue their own interests; freedom from
regulation
• Voluntary Exchange- An act or agreement
between two or more free individuals and/or
organizations to buy, sell or trade a good or
service
• Private Property- Land/belongings owned by a
person(s) and kept for their exclusive use
• Profit Motive- The intent to achieve monetary
gain in a transaction; the desire for profit that
motivates one to engage in business
ventures/deals
©2012, TESCCC
©2012, TESCCC
Global Economic Systems
• Free Enterprise (Free Market, Capitalism)
• Socialism (Mixed economy)
• Communism (Command economy)
• Where would the US lie on this economic
spectrum?
←------↨----------------↨------------------↨-------→
Free Market Socialism
Communism
©2012, TESCCC
U.S.
Free
Enterprise
Communism Socialism Capitalism
Government
Control
Competition
Public
Ownership
(land and/or
natural
resources
©2012, TESCCC