Transcript Market Economy Notes

Title: Market Economy
EQ: How Does a Market Economy
Work?
Cornell Notes
*Adam Smith
• Scottish Philosopher
& Economist
• Believed in a free
economy/enterprise
Market/Capitalist Economy:
• A private ownership (a person
owns a business) of production
with little or no gov’t control.
• Individual companies decide:
• How and what to produce &
the $ of product.
*Free Enterprise
• We are free
to open any
business.
Command Economy (Communism):
• A government that controls its
economy:
• What to produce, how to produce &
price for goods.
• Gov’t owns property.
*Supply
• The amount of
a good or
service that
producers are
willing & able to
offer for sale.
*Demand
• Quantity of a
good or
service that
buyers are
willing & able
to buy.
*Private Property
• Belongs to
the people
& not the
gov’t.
*Limited Gov’t
• Gov’t does not
put too many
controls on what
the business
produces & the
prices they will
set.
*Competition:
• Gives consumers a choice at the
products they will buy.
• Forces people to make better products
to stay in business.
*Property Rights
• If property
belongs to
you, its value
impacts you.
Incentives
• Benefit or
reward if you
care for your
home…if so, the
more it is
worth.
*Eminent Domain:
• 5th amendment =
allows gov’t to take
private property for
public use only.
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