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Free Enterprise System

Free Enterprise System. Roles in Free Enterprise. Consumers Consumers make their desires known through their economic dealings with producers When consumers buy products, they signal to producers to produce more of that particular item

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Free Enterprise System

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  1. Free Enterprise System

  2. Roles in Free Enterprise • Consumers • Consumers make their desires known through their economic dealings with producers • When consumers buy products, they signal to producers to produce more of that particular item • Review products to assist others in determining which products to purchase • Entrepreneurs • Bring together the factors of production

  3. Economics in the Constitution • “Economic freedom plays a dual role in the promotion of a free society. On the one hand, freedom in economic arrangements is . . . an end in itself. In the second place, economic freedom is also an indispensable means toward the achievement of political freedom.” — Milton Friedman, Capitalism and Freedom

  4. Economics in the Constitution • “no person shall be . . . deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” — Fifth Amendment of the Constitution • Eminent Domain: the right of a government to take private property for public use • the government must pay the person the fair value of the property that has been taken

  5. Economics in the Constitution • Taxation • Article I gives Congress the power to levy taxes • both individuals and corporations must pay federal income tax • Contracts • guarantees people and businesses the right to make contracts • individuals or businesses cannot use the political process to be excused from their contracts

  6. Role of the Government • Americans have come to expect the government to take other actions to promote the public interest • One of the government’s important roles in the economy is to make sure that producers provide consumers with information • Congress has passed public disclosure laws, which require companies to give consumers important information about the products or services that they offer

  7. Role of the Government • Protecting Public Health and Safety • Environmental regulations • Quality standards • Usage restrictions • Regulation increased in the 1960s and 1970s, but decreased in the 1980s

  8. Review • What roles do consumers play in the Free Enterprise System? • Explain the concept of eminent domain. • What roles do the American people expect the government to play when it comes to the economy?

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