Chapter 19: The American Economy

Features of Capitalism

• Features of Capitalism
• *Capitalism- an economic system in which private citizens own and use the factors of production in order to seek a profit.

• Capitalism and free enterprise

*Free Enterprise- is another term used to describe the American economy.

• *Free Enterprise- is another term used to describe the American economy.
• -In this type of economy, competition is allowed to flourish with a minimum of government interference.

Markets

• Markets
• -Are an important part of our economic system.
• *Markets- are the main places where the buyers and sellers meet to negotiate product prices.

*Consumer sovereignty- the roll of consumer as the ruler/king of the market, determining what products will be provided.

• *Consumer sovereignty- the roll of consumer as the ruler/king of the market, determining what products will be provided.
• *Private property rights- are another major feature of capitalism. This means that we have the freedom to own and use, or dispose of, our own property as we choose as long as we do not interfere with the rights of others.
• *Competition- is what capitalism thrives on. It is the struggle that goes on between buyers and sellers to get the best products at the lowest prices.

The Profit Motive

• The Profit Motive
• *Profit- is the amount of money left over after all the costs of production have been paid.
• *The Profit Motive- the driving force that encourages individuals and organizations to improve their material well-being – is largely responsible for the growth of a free enterprise system based on capitalism.