UNIT 1.02
KEY CHARACTERISTICS OF THE PRIVATE
ENTERPRISE SYSTEM
Private Enterprise System
Role of the Individual as a Producer
Role of the Individual as a Consumer
Role of the Individual as a Citizen
PRIVATE ENTERPRISE SYSTEM
An economic system that rewards firms for their ability to
perceive the needs and demands of consumers
Capitalism
30 million US businesses in operation
3 main types of business
1. Sole Proprietors
2. Partnerships
3. Corporations
 Fortune 500
HOW DO BUSINESSES AND CONSUMERS
INTERACT?
Role of the Individual as a Producer
Role of the Individual as a Consumer
Role of the Individual as a Citizen
INDIVIDUAL AS A PRODUCER
 Contribution to Economy
 Goals – Things a person wants to accomplish, such as
getting a college education, buying a car, or starting a
business
 Values – Things that are important to you in life
 Standard of Living
 Measure of how well people in a country live
 Quality and quantity of wants and needs that are satisfied
 Often determined by your choice of career
 Career Choices
 www.careercruising.com
ENTREPRENEUR
Someone who takes a risk in star ting a business to earn a profit
 The bad news:
 Over 1 million businesses start up in America each year
 Over 500,000 close each year
 Most start ups close within 16 months
 The good news:
 Average income for small business owner is $233,600
PROFIT
The amount of money available to the business af ter all costs
and expenses have been paid
How to increase profits?
 Increase sales
 Increase price
 Decrease costs
INDIVIDUAL AS A CONSUMER
 Consumes goods and services
 Vitale role in economic system
 Buy/Not-Buy decision effects what goods and services are
produced
 Heavily targeted by businesses
 Pay for Needs First
 Food
 Clothing
 Shelter
 Consumer Wants are a Huge Market!
GALLUP DAILY: U.S. CONSUMER
SPENDING
HOUSEHOLD SPENDING BY CATEGORY
STRENGTH OF THE CONSUMER
 Customer Service Key
 70% of Americans are willing to spend 13% more with
companies they believe provide excellent customer
service
 78% of consumers have bailed on a transaction because
of poor customer service
 Advocacy Groups
 Protect people from corporate abuse (unsafe products,
predatory lending, false advertising, etc.)
 Prevention & Awareness (anti-smoking groups,
parental advisory labels, etc.)
INDIVIDUAL AS A CITIZEN
 Bill of Rights
1. Freedom of religion, speech, press, assembly, and petition .
2. Right to keep and bear arms in order to maintain a well
regulated militia.
3. No quartering of soldiers.
4. Freedom from unreasonable searches and seizures.
5. Right to due process of law, freedom from self-incrimination,
double jeopardy.
6. Rights of accused persons, e.g., right to a speedy and public
trial.
7. Right of trial by jury in civil cases.
8. Freedom from excessive bail, cruel and unusual punishments .
9. Other rights of the people.
10.Powers reserved to the states.
CITIZEN’S ECONOMIC RESPONSIBILIT Y
Vote
Pay Taxes
Obey the Law
WHAT HAPPENS IF ECONOMIC
RESPONSIBILIT Y IGNORED?