FrontPage: The top 20% wealthiest in America own _____% of the wealth…

The Last Word: Ch 3 Review due and Unit 1 Test - Wednesday

How Free Enterprise Allocates Resources

Chapter 3, Section 2

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

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

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

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

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

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?

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