Hey David, in class today when Mr. C was teaching about our economy I was a little confused. Do you think you can help explain it to me?
Sure! The first thing you will need to know is that the basis of the US economy is that it is based on a market economy, or capitalism.
Oh! I remember that, it's the private ownership of resources by individuals, right?
Exactly. The economy is molded around 4 principles: private property, freedom or choice, profit, and competition.
I remember private property. That's the right to use own and dispose of things of value. I can't remember what Freedom of Choice is about.
Freedom of Choice means that you can make economic decisions independently, but must accept the consequences of those decisions. It basically means that we have a right to decide where to shop, what to buy and how much we want to spend.
I think I remember profit. That's the money left over from sales after all operating costs have already been paid, right?
Exactly. Competition is the rivalry among businesses to sell their goods and services. Competition encourages businesses to improve their products and keep their prices low.
Thanks for the lesson! I'm so glad I understand it now.