Private Enterprise Systems Economic Systems Every society

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Private Enterprise Systems
Economic Systems
Every society develops a system for making decisions about how it will use its resources
These economic systems must answer the following questions:
 What ______________________________ will be produced?
 ________will these goods and services be _____________________?
 How will these goods and services be _________________________________?
Private Enterprise System
In this system, the questions are answered by individuals and businesses,
________________________________________
Individuals and groups own or control the economic resources – human and natural resources
and capital goods – ___________________________________
The characteristics of the private enterprise system has enabled the nation to produce more
goods and services than any other ___________________________
Freedom in the Marketplace
In economic terms, _________________________ to any place where buyers and/or selling of
goods and services occur
_____________________________ is often called a market economy or a market system
because markets answer the questions of what, how, and for whom to purchase
Free to Choose
Markets in private enterprise are self-regulated and _______________________________
They are free to choose:
 What they wish to produce
 Which resources to purchase
 What techniques of production to use
 How their goods or services will be marketed
 What price(s) they will charge
 When to close down or go out of business
Economic Vote
Each time a consumer ____________________________, s/he is casting an economic vote
(dollar vote) in the marketplace
These economic votes enable consumers to control what will be ______________________
If consumers _______________________________, the producer must change it, replace it, or
go out of business
It is the responsibility of the consumer to be well informed and to make ___________________
Private Property
____________________________________________ is considered private property
 Business property
 _____________________________________________________.
 Personal property
 _____________________________________________________
Ownership includes the results of your work




________________________________________________
________________________________________________
________________________________________________
Individuals’ ownership of the profit that comes from the sale of private property
Individuals and businesses in a private enterprise economy are free to decide how to use their
private property and when and how to sell it
 Enter freely into contracts involving their private property
 ____________________________________________
Individuals and businesses in a private enterprise economy are free to decide how to use their
private property and when and how to sell it
 _____________________________________________
 Stop others from using their private property




Abuse their private property as long as they are not stepping on the rights of others
____________________________________________________________
Use their private property to make income
___________________________________________________________________
Limited Government Control
The private enterprise system in the U.S. is not a pure private enterprise system because there is
a limited amount of government control
 Mixed system – individuals and businesses are the primary economic decision makers,
____________________________________________________________
Mixed System
 _________________________________________________
 The role of government has gradually expanded partly because Americans want certain
problems, like inflation, pollution, and unemployment, solved
Competition
__________________________________________________________________
Businesses compete by offering better credit options, improving goods and services, creating
new goods and services, and providing better service
Profit Motive
Profit is the monetary reward business owners receive in return for taking the risk involved in
starting a business
____________________________________________ is called the profit motive (forms the
economic basis for the private enterprise system)
Many people consider making a profit the
______________________________________________________________________________
Price Directed System
A private enterprise system is often called the price-directed system because price determines
what consumers buy, which jobs they will take, the success or failure of businesses, and the
types of products that will be produced
__________________________________________________________________
Weaknesses
While the private enterprise system is the most productive in the world, it does have some
negative aspects, or disadvantages
 Production drops when sales are low; companies may lay off workers or go out of
business; results in periods of unemployment
 Poverty has not been eliminated
 Property and income are not distributed equally; some own a lot, others own nothing
In a private enterprise system, ____________________________________________ own or
control the economic resources
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