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Six Pillars of Free Enterprise Cheat Sheet (DRAFT) by [deleted]

Six Pillars of Free Enterprise

This is a draft cheat sheet. It is a work in progress and is not finished yet.

Introd­uction

People in their economic roles are free to make choices. People make economic choices they believe offer them the most benefits There are six pillars of the free enterprise system

1. Private Property

Private Property is the resources and products owned by indivi­duals or busine­sses.
Public Property refers to the resources and products owned by the govern­ment.
“Property” describes land, buildings, machines, tools, natural resources, even miscel­laneous items.
The right is protected by the U.S. Consti­tution.
Can choose to use as you wish, but also bear the respon­sib­ility for it (maintain and take care of it).

2. Specia­liz­ation

The process in which businesses and people focus on producing one or few parts of an entire product.
Specia­liz­ation allows a business to increase the amount it produces and sells.
Contri­butes to higher wages and profits.
Everyone is not respon­sible for doing all things.

3. Voluntary Exchange

Specia­liz­ation leads to voluntary exchange, people willingly buy and selling all the things they want from the economy because they do not have the time/r­eso­urces to do it themse­lves.
Without specia­liz­ation, indivi­duals would have to do without many useful and expected products and services.

4. Price System

The price system uses monetary prices as a message system to facilitate exchanges between buyers and sellers.
Prices are messengers
When buyers make a purchase, they use the price as a guide of the value of the item.
Prices commun­icate to businesses how willing customers are to purchase the product
Prices are incentives
Increasing prices encourages businesses to increase production of that product (high prices lead to bargain shopping which leads to reducing prices)
Falling prices encourage business to reduce production of that product
 

Six Pillars of Free Enterprise

5. Market Compet­ition

Compet­ition among businesses is called Market Compet­ition. It takes two forms.
Compet­ition in resource markets
Resources are land, labor, capital used to make products and services
Compet­ition in product markets
All the products that consumers buy

6. Entrep­ren­eurship

It is the motivation that drive business leaders to compete and react to changing conditions in the market. Entrep­reneurs take risks with their time and money in innovating ideas and products, knowing they might fail.
In the U.S., the economy operates with limited government involv­ement. Since citizens can own property and make most of the decisions, entrep­reneurs do very well.

Promise of Free Enterprise