the last word: ch 3 review due and unit 1 test - wednesday
TRANSCRIPT
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FrontPage: The top 20% wealthiest in America own _____% of the wealth…
The Last Word: Ch 3 Review due and Unit 1 Test - Wednesday
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How Free Enterprise Allocates Resources
Chapter 3, Section 2
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How Does Free Enterprise Allocate Resources?
Consumers are looking to get the best value of a good or service for their money
Producers as looking to make as much profit as possible
Profit - Money left over after paying for production costs Revenue – Costs = Profit
Revenue- Money made from selling a good or service
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By trying to earn profit, producers help to allocate resources
Allocate- to set aside or locate scarce resources
We allocate our money or set it aside to fulfill wants that we feel are most important. ▪ Gas, Bills, Food
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Ex. Seeking Profit
People allocate resources to places they know they will make money
Convenience Stores They charge a
reasonable yet higher price on their products
By convenience store X making profit, it will motivate Timmy to open his own store
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Profit Motive and Allocating Resources
Resources are now being allocated (set aside) for convenience stores instead of another area This creates
competition and variety in the economy
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Consumers Also Allocate Resources
When you buy a product you are choosing it over another This helps to influence what producers will make and
provide
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Questions
What other trends have taken place in society where a new product causes companies to reallocate their resources into a new product?
How does a free enterprise system keep their from being to many conveniences stores in a market?
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Role of Gov’t In Our Economy
Our Gov’t plays a limited role in regulating our economy We call this modified
free enterprise
Gov’t takes taxes from individuals, businesses, and provides services ex. Military, Social
Security, Roads
• Product/ Factor Markets provide resources for gov’t to use to operate
• Ex. Gov’t workers, computers, land