3. • Economics is the study of
how people satisfy
unlimited wants and needs
through the use of limited
resources.
4. Every society/country has to choose how to use its
resources to produce and distribute goods and
services
• What and how much should be produced?
• How should goods be produced?
• Who gets the goods and services
6. An economic system is
• The system or way a country chooses to
use and distribute…its resources to
produce and distribute goods and services
for its people.
• Capitalism
• Socialism
• Communism
7. Capitalism
• An economic system based on private
ownership of productive property
(farmers fields, gold, natural resources)
U.S., Germany and Japan
8. Four Factors of Production
• Land – resources
• Labor - work
• Management (MGMT) – organize and
decide
• Capital - $ and machinery
15. • Another name for a capitalist economy
• Free-Enterprise system
• Free – Market system
People are free to start and run their own
businesses
16. Free Enterprise System
• Five characteristics of a free enterprise
system
– Private Ownership
– Guarantee of Property Rights
– Private Decision Makers
– Competition
– Freedom of Choice
19. Private Decision Makers
– decisions of what to produce left to
individuals and companies
– decisions of how to produce left to
individuals and companies
– decisions of how much to produce left to
individuals and companies
22. Advantages of A Capitalist
System
• Adam Smith – (Father of Capitalism,
author of The Wealth of Nations, 1776)
– The free market benefits society
– Self interest leads to a collective good
23. Advantages of A Capitalist
System
• Everyone has an opportunity to succeed
• “The harder you work, the greater the
reward”
• Spawns/rewards innovation
• Coexists with “human nature” “Greed is
good!”
• Allows for a high degree of freedom
• Works along side democracy
• Economies of a country grow rapidly
24. Disadvantages of A Capitalist
System
• Inequality; Benefits not distributed equally
• Can lead to irrational behavior; “Greed is
Good?
• Creation of Monopolies
• Great poverty
• Limited government control
• People are not treated fairly
• Failure of the “American Dream”
25. • Does the United States really have a
capitalist economy?
• Are we really free to do whatever we want
with our productive property?
26. Mixed Economy
• Why is the U.S. called, a mixed
economy?
• Private business and the government play
a part in the economic system
• Regulation of business – cars – seatbelts
• Government runs business
• Government grants license or utility –
PECO, Comcast, Pa American Water
Company
27. Kinds of Business in a Free
Enterprise System
Kind Advantages Disadvantages
Sole Proprietorship
-A business owned
by one person
Partnership
- A business owned
by two or more
people
Corporation
- Has many owners
called share holders.
Corporations are
owned by the public
32. Capitalism
• A different approach
– Capitalism is not about “Greed” or maximizing your
profit by being a winner and beating your competition.
– The way to maximize your benefit is not just seek
your own self interest but to seek a way that benefits
the group as well
– Capitalism is about people acting in each other’s own
self interest and the society benefiting as a result.
This works because achieving your self interest
requires serving others.
33. Capitalism
• In order to profit you have to provide a
product or service some one else values.
Bill Gates, Michael Dell, and Stephen Jobs
are very, very wealthy because everyone
values Microsoft Windows and Office,
iPhones, Macs, and laptops.
• John Nash Ideas beyond the left/right,
red/blue, and liberal/conservative thinking
38. Capitalism Benefits the
Common Man!
• “Chances to Succeed” – K Allen
• “Creates the best products” – M Purcell
• “encourages competition” – B Hagel
• “We can own our own businesses” – A Jablonski, A
Manning, J Bankowski
• “Opportunity to make our own $” – J Pigeon
• “Encourages/rewards our best effort” – B Chronister
• “Working to benefits others through your own personal
benefits” – A Ignus, A Alford
• “Earn what you work for” – N Martorella
39. Capitalism Benefits the
Common Man!
• “the market leans toward efficiency” – C Madrack
• “create opportunity for yourself” – H Falco
• “gives you more freedom” – M Kampmeier
40. Capitalism Benefits the
Common Man!
• “keeps prices low” – N Ozoroski
• “equal opportunity to succeed” – A Machita, C Rivers
• “consumers have choices” – J Schwed
• Competition leads to better performance” – P Sheridan
• “Allows for better products to become available” M Cravetz
• “People can profit” – M Collilouri, Joey Villante
• “Incentive/motivation to better themselves” – A Stagliano, D McCrary
• ‘Start you own business” - B Nguyen, J Culp
• “Competition leads to better prices” – J Cook
