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The Economic at Why It Matters

Tell students that American economic TAKING As you read, take BEFORE YOU READ NOTES freedoms include the freedom to buy notes on economic and sell, to earn a living, to earn a The Main Idea Reading Focus Key Terms , life in a , and the U.S. economic system. profi t, to compete, and to own property. Countries form many 1. How do different economic , p. 452 Use a chart like this one to record Ask students which of these freedoms types of economic systems help satisfy people’s , p. 452 your notes. systems to meet their needs? , p. 453 they have experienced in their daily 2. citizens’ needs and wants. What factors shape life in a , p. 453 lives. (Possible answers: the freedom The United States has a market economy? , p. 453 market economy. 3. What is the U.S. economic to compete for jobs, the freedom to buy law of demand, p. 453 system like? and sell merchandise or services) Tell free enterprise, p. 455 students to consider how these freedoms , p. 455 , p. 456 are important to the health and well be- ing of U.S. citizens. Key Terms Preteach the following terms: Our is based on principles The Need for Economic Systems of individual freedom. Those same market economy economy in which All around the world, people need certain principles of freedom apply to the things to survive. People cannot live without people are free to obtain and services U.S. economic system. We have food and water, shelter, and clothing. These in almost any way they want (p. 452) what is called a free market economy. This means basic materials that people cannot live with- free market right to buy and sell goods as that if you want to start a business, you can. Your out are called needs. you want (p. 452) success will be determined by your business ability In addition to their needs, there are many profi t that a business has left after and the market, not by a agency. items that people want in order to make their expenses (p. 453) Economic Systems lives more comfortable. These items are not scarcity lack of a particular resource necessary for survival, but they can have great (p. 453) Suppose you wanted to make a sandwich to people. For example, you may want law of supply economic principle that but you discovered that you had no bread. a television, a cell phone, or a car. You do not businesses will produce more products How could you get more? Would you have really need any of these things in order to live, when they can sell them at higher and to grind wheat into fl our so that you could but they can make your life easier, more com- fortable, or more enjoyable. These types of fewer products when prices are low (p. 453) bake a new loaf? Might you have to stand in a long line for hours before someone gave items are called wants. Different people have law of demand economic principle that you a few slices? Of course you wouldn’t. different wants. In addition, a person’s wants buyers will demand and buy more products With a quick trip to the store, you could buy can change over time. when prices are low and fewer products as many loaves of bread as you wanted. People satisfy their wants by obtaining when prices are higher (p. 453) In other parts of the world, however, get- . For example, if you want free enterprise principle that business ting items like bread is not as simple. How fun, you can buy a new game. The process of owners in a free market are allowed to run people get the things they want is determined obtaining goods and services to satisfy your their businesses in any way they see fi t, with by a country’s economic system. The wants is called the want-satisfaction chain. little government interference (p. 455) of economic systems varies widely from place How people obtain goods and services is what capitalism economic system in which the to place. However, they all help people create distinguishes different economic systems from means of are owned by private and obtain the goods and services they need. each other. citizens (p. 455) monopoly what a company has when it is 450 CHAPTER 17 the only one selling a product or providing a (p. 456) Teach the Main Idea At Level Taking Notes The Economic System at Work Economic Life in a Market U.S. Economic Systems Economy System 1. Teach Ask students the Reading Focus 3. Review Create a master list of the section’s • How people • • U.S. mixed obtain goods for resources economy questions to teach this section. illustrations on the board. Ask students and services • Supply and • Mostly market to share their observations about each • Traditional, demand economy 2. Apply Have students preview the section command, • Free • Some and create a list of all of the illustrations in illustration. and market enterprise, government capitalism regulation the section. Ask them to leave room next to 4. Practice/Homework Have students write each illustration description for comments. a one-paragraph story to illustrate each of As students read the section, ask them the four American economic freedoms. to analyze how each illustration shows a concept discussed in the text.

450 CHAPTER 17 The Want- Satisfaction Chain To satisfy your need for food, you may want a sandwich on a bun. This want-satisfaction chain shows the steps involved in helping you Reading Focus satisfy that want.

How do different economic systems help satisfy people’s needs? Economic Systems Contrast In what ways is a market economy different from a command economy and a ? A market economy is based on produc- ers’ and ’ freedom to make decisions about what they buy and sell, and it involves and money. In a traditional economy, people grow their own food and make their own products. In a command economy, the government makes all economic decisions. 1 Grain 2 Flour 3 Bread becomes Flour becomes Bread is Delivered Elaborate What are some of your Farmers harvest grain and send it to Bakers use flour to make all kinds of Kitchens, restaurants, and cafeterias wants, and what infl uences them? mills where it is ground into flour. bread products, including sandwich buns. receive bread from bakeries. Students’ answers will vary but should show understanding of wants and what infl uences them. From the Source: Readings in Economics and Government: Reading 64: Making in a Democracy ; Reading 67: The Affl uent Society 4 Lunch is Served The final step in the want-satisfaction chain is a tasty sandwich on a bun. Linking to Today Satisfying Customers’ Wants Some- times manufacturers change their prod- ucts in order to better satisfy custom- ers’ wants. For example, the Nabisco ANALYSIS SKILL ANALYZING VISUALS company has been producing cookies and crackers since 1898. In 2005 the What different industries are involved in the want-satisfaction chain? company introduced new versions of several kinds of cookies and crackers

THE ECONOMIC SYSTEM 451 made with whole grains. The company hoped that the new snacks would satisfy the wants of health-conscious consum- Collaborative Learning At Level ers, inspire them to buy the new snacks, and help the company make money. Create a Graphic Organizer 1. Organize students into small groups. Have consumers would be unable to shop for the each group select an economic freedom and best price if they did not have the freedom to imagine that this economic freedom does buy what they want from different merchants. not exist. 3. Invite groups to present their charts or 2. Have each group create a chart or diagram diagrams to the class. Visual/Spatial, describing the problems or limitations that Verbal/Linguistic the U.S. economy would experience if that Alternative Assessment Handbook: Rubric 13: specifi c economic freedom were missing. Graphic Organizers For example, students might indicate that Answers Analyzing Visuals farming, milling, baking, delivery, food service 451 Types of Economic Systems The third type of economy is the one There are three basic economic systems in found in most countries, including the Unit- the world: traditional, command, and mar- ed States. It is called a market economy. A ket economies. Most countries today use a market economy is one in which economic MISCONCEPTION mix of these systems to satisfy their citizens’ decisions are made by individuals looking out ALERT wants and needs. for their own and their families’ best . In a traditional economy, economic deci- People can start businesses to make and sell Make sure students understand that the sions are based on how economic activity has any legal products they choose. Based on the text refers to the American economic been carried out in the past. People may grow market, they can also set their own prices for system in four ways: a market economy, their own food and make their own goods. these products. In other words, the govern- a free market, capitalism, and a free They might grow and make everything ment does not tell people what to produce enterprise system. Clarify that these they need to survive, or they might trade to or buy. In this way, a market economy is the terms all describe the same American obtain things that they cannot make them- opposite of a command economy. economic system. selves. If they do trade, they may or may not A market economy is based on freedom. use money. They may use a system in People are free to own property, to create com- which they trade goods for other goods. panies, and to buy products as they choose. A second type of economic system is The right to buy and sell goods as you want called a command economy. In this kind of is called a free market . Companies also need system, the government makes all economic to be free to compete with each other. In a decisions. In addition, the government owns free market, competition among sellers—not or controls all , tools, and production any government policy—is the main fac- equipment. It tells managers and workers on tor in setting prices. Sellers try to price their farms and in factories what they can pro- goods lower than their competitors so that duce, how much of it to produce, and how people will buy them. At the same time, they much they can charge for it. Historically, have to be careful not to set their prices so many Communist countries have tried to low that they lose money. set up command economies. Most of these READING CHECK economies have collapsed, but North Korea Explaining Why do countries and Cuba still have command economies. need economic systems?

American Economic Freedoms Among the basic rights we have as Americans are certain economic freedoms. These economic freedoms are the foundation of our free market economy. How do these freedoms affect our everyday lives?

Freedom to Own Property Freedom to Compete

452 CHAPTER 17

Differentiating Instruction Above Level Advanced Learners/GATE Research Required Research Command Economies that incorporates their research. Remind 1. Have students research the Cuban economic them to use specifi c examples in their essays. system and another example of a command Students may also wish to compare the two economy using reference books and the economies in their essays. Internet. Allow students to use historical 3. Allow students to share their essays with the Answers examples, such as the . class. Verbal/Linguistic 2. Alternative Assessment Handbook: Rubric 42: (photo) Possible answer: They allow us Ask students to write an informational essay Writing to Inform to make our own decisions about how to about the government’s role in the Cuban earn and spend money. economy and the other economy they chose Reading Check to satisfy people’s needs and wants 452 Life in a Market Economy Changes in prices are usually the result In a market economy, people are free to start of the laws of supply and demand. These a business and pursue profi t. Profi t is the laws are among the most basic of all eco- money a business has left after it has paid its nomic principles. The law of supply states expenses. The profi t motive, or the desire to that businesses will produce more products Reading Focus make a profi t, is essential to a successful mar- when they can sell them at higher prices. ket economy. If people do not want profi t, They will produce fewer products when What factors shape life in a market they will not start businesses and people will prices are low. The law of demand , on the economy? have no way to obtain goods and services. other hand, states that buyers will demand, or want, a greater quantity of a good when Life in a Market Economy Competition for Resources its price is low. Likewise, as prices rise, the In order to make a profi t, people need to quantity demanded falls. That is, when the Explain What happens when a provide a good or service. In order to pro- price of a good goes up, people buy less of resource becomes scarce? It is harder vide a good or service, they need resources. that good. for producers to obtain, and prices As you know, however, resources are not Although you may not realize it, you for products made with that resource unlimited. As a result, businesses and indi- are probably already familiar with the prin- might rise. viduals must compete for the resources ciples of supply and demand. Imagine, for Make Generalizations they need. This competition eventually example, that you are paid $100 by each of How do affects everyone, not just business owners. your neighbors to mow their lawns. You will businesses use the laws of supply and In time, it affects the prices we pay for the probably want to mow quite a few lawns, demand to try to make a profi t? To goods we want. because that is a good price for your service. increase their profi t, businesses have One result of the competition for these Imagine, however, that your neighbors only to fi nd the highest price that custom- resources is scarcity. Scarcity is the lack wanted to pay you $1 per lawn. Would you ers are willing to pay for the goods or of a particular resource. When a resource still want to mow as many? Most people services they offer. becomes scarce, it is harder for producers to would not, because that price is too low. obtain. Products made with that resource also That is what the law of supply states—peo- Elaborate What factors might affect become more diffi cult to obtain. As a result, ple are more eager to provide a good or ser- the demand for a good or service? the prices for these items usually rise. vice for a high price than for a low one. Possible answers: its price, quality, usefulness, ease of use, advertising Political Cartoons for Civics, Government, and Economics: Cartoon 12: Concentration of the Country’s Wealth

Connect to Math Supply and Demand To clarify the laws of supply and demand, present the fol- lowing problem to students: Jan’s Records is selling CDs for $18. Freedom to Buy Freedom of Workers Freedom to Today, Jan sold fi ve CDs. Nita’s Music and Sell to Compete for Jobs Earn Profits is selling CDs for $12. Today Nita sold ten CDs. Which merchant made more money? Why? (Jan made $90, while Nita made $120.) Help students to un- THE ECONOMIC SYSTEM 453 derstand that although Jan wants to sup- ply CDs at $18 a CD, there is limited Below Level demand for CDs at that price. In con- Differentiating Instruction trast, Nita is supplying CDs at a price Learners Having Diffi culty which customers prefer, or demand. Illustrate Supply and Demand brief description of how the laws of supply 1. Have students look through newspapers and and demand explain each headline. magazines to fi nd headlines about events that 3. Have volunteers explain their collages to the illustrate the effects of supply and demand. class. Visual/Spatial, Verbal/Linguistic 2. Ask each student to cut out these headlines, Alternative Assessment Handbook: Rubric 8: paste them onto a sheet of paper, and write a Collages

THE ECONOMIC SYSTEM 453 Info to Know Copyright Law Article 1, Section 8, Clause 8 of the United States File-Sharing and Copyright Law Constitution reads, “To promote the In June 2005 the U.S. Supreme Court ruled that a popular Web Progress of Science and useful Arts, by site was responsible for violating copyright laws. The company securing for limited times to authors itself did not download illegal material. However, its file-sharing and inventors the exclusive right to technology helped individuals share copyrighted materials, such their respective writings and discover- as movies and music, without paying for them. ies.” The law protects the works of art- Article I, Section 8 of the Constitution ists, scientists, authors, and inventors. gives Congress the power to make copyright laws. Copyright laws give artists such as writers, painters, and performers lifetime ownership of their work. People who wish to use a copyrighted work must receive the owner’s permission and often pay a fee. For example, whenever you buy a CD, the copyright holder gets paid. But how would the copyright holder get paid if you did Downloading music from the Internet without not pay for the CD? People are often tempted to down- paying for it may violate copyright laws. go.hrw.com load music files without paying. This is illegal—it violates ANALYSIS the artist’s copyright. For some artists, the lost income SKILL EVALUATING THE LAW KEYWORD: SZ7 CH17 from illegally downloaded works may threaten their abil- 1. Why do you think the framers of the Constitution ity to continue working. Other artists, however, offer free, wanted to protect artists’ rights to their works? legal downloads of their music on the Internet to attract 2. What do you think can be done to discourage more listeners. people from illegally obtaining copyrighted music and movies?

The law of demand works in the same To understand this balance, imagine that way. If you went to a CD store and found you are selling lemonade. You need to fi gure that CDs were priced at $2 each, how many out a good price to charge for your product. would you buy? At that price, you might First you think that you would like to charge buy quite a few of them. How many would $10 per glass. That way you will make a large you buy, though, if they cost $25 each? You profi t on each glass that you sell. Unfortu- would probably buy fewer, because the price nately, however, people do not want to pay is so much higher. That is the basic idea that much for it, and you are left with lots of behind the law of demand. unsold lemonade. What business owners hope is that the To try to sell more, you decide to drop supply of and demand for a product will bal- your price. Now you will sell lemonade for ance each other. Because they want to fi nd a nickel a glass. Lots of people are willing to a price at which consumers will continue to buy it now. However, you quickly learn that buy a product, the price cannot be too high. it costs you more to make the lemonade At the same time, however, business owners than you earn by selling it. Obviously, you need to make a profi t. Therefore, the price will need to raise your prices if you want to cannot be too low either. stay in business for long.

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Collaborative Learning Above Level Discuss the Use of Copyright Law 1. Tell students that they will create arguments musical material. Have students create for and against the use of the U.S. arguments to present in a discussion on copyright law as it pertains to fi le sharing of fi le-sharing. copyrighted material. 3. Ask students to present their cases in a Answers 2. Have students work in small groups to classroom panel. Interpersonal, Verbal/ Evaluating the Law 1. Possible portray the following: software companies, Linguistic answers: to ensure that they could representatives of musical artists, customers Alternative Assessment Handbook: Rubric 11: make a living from their work; to prevent supporting fi le sharing of copyrighted music, Discussions plagiarism 2. Possible answers: Jail customers against fi le sharing of copyrighted those who disobey the law; create a technology that ensures that the material cannot be copied. 454 In response, you raise your prices to $2 The constant desire to improve products per glass. You now have fewer customers than means that innovation is also important in you did before, but your business is still steady. free enterprise. Clever thinkers are always You are also making less profi t per glass than looking for new products they can create or you did when you charged $10, but you are for ways to improve existing products. They not losing money. In other words, you have hope that their innovations will help them Checking for Understanding managed to achieve a balance between sup- make huge profi ts from their products. True or False Answer each state- ply and demand. Innovative people do not want others to ment T if it is true and F if it is steal their ideas. They want ways to protect false. If false, explain why. Free Enterprise what they have created so that no one else 1. In a market economy, no one orders busi- can take credit for it or make money from it. The U.S. economic system is ness owners how to run their businesses. Of In the United States, there are two ways to called capitalism. T course, if owners do not follow the laws of protect ideas. A patent gives you the exclu- 2. The U.S. economic system is supply and demand, their businesses fail. Still, sive right to make and sell your invention also called a free enterprise business owners may operate however they for a certain number of years. A copyright is system. T see fi t, with little direction or interference the exclusive right to publish or sell a piece of 3. There is a lot of government by government. This principle is called free writing, music, or art. interference in the U.S. economic enterprise . system. F; In the U.S. economic The free-enterprise system offers enter- Capitalism prising businesspeople the opportunity to The main driving force behind the American system, there is freedom to make huge profi ts. For example, Bill Gates economy today is capitalism. Capitalism is compete without unreasonable and Steve Jobs are two Americans who used an economic system in which the produc- government interference. their economic freedom to start successful tive resources—farms, factories, machines, companies. With no intervention from the and so on—are owned by private citizens. government, they turned their companies— Capitalism is closely linked to a market Microsoft and Apple Computer—into hugely economy. People are free to buy and sell as successful operations. they please. Capitalism also encourages peo- Most companies are not as successful as ple to invest their money so that they will be Microsoft and Apple, though. By accepting successful fi nancially. If they are successful, the opportunity to make profi ts, business they will be able to improve their quality of owners also open themselves to the possibil- life. Anyone with a little extra money has the ity of huge losses if their companies do not opportunity to invest it, either in a company perform well. They might create a product of their own or in someone else’s company. only to learn that there is no demand for it, If a company is successful, it can make or they might fi nd that they have to charge huge profi ts, and not only for its owners. more than people are willing to pay for their All the people who invested in the com- goods. Mistakes like these can cost business pany can also make profi ts. By encouraging owners. Some even end up losing their com- , innovation, and the produc- panies. This is the main risk that people face tion of quality goods, the capitalist system in a free-enterprise system. benefi ts the American people as a whole. Competition is vital to the free-enterprise system. As you have already learned, competi- tion between companies is the main factor in Since competition is an essential part of the setting prices. In addition, competition drives free-enterprise system, business practices companies to improve their products. Each that limit competition are frowned upon. company wants the products it creates to be Such practices disrupt the free market and the best so that people will buy them. weaken a market economy.

THE ECONOMIC SYSTEM 455

Collaborative Learning At Level Research African American Inventors’ Patents Research Required 1. Tell students that, before the Civil War, 3. Have each group identify and share with African American slaves could not receive the class at least one item patented by the patents on their inventions. This changed, inventor they researched. Students should however, in the years following the war, when explain how each invention works and, if African Americans were freed from . possible, show a picture of it. 2. Divide students into small groups. Have 4. Lead a class discussion on how receiving each group research an African American patents is an important economic freedom for inventor—such as Jan Matzelinger, William all Americans. Verbal/Linguistic Purvis, Andrew Beard, or Granville Woods— who received at least one patent during the years 1870–1900.

THE ECONOMIC SYSTEM 455 The U.S. Economic System As you have already learned, the United POLITICAL CARTOON States has a market economy. For the most Monopolies part, people are free to produce and buy any goods they wish in any way that they wish. Reading Focus Because monopolies limit competition, they harm our free- enterprise system. As a result, they are outlawed in the In a few instances, however, the U.S. What is the U.S. economic system United States. government does impose some regulations like? on businesses, much like you would fi nd in a command economy. In this way, our The U.S. Economic System market economy also includes a mix of ele- ments of other economic systems. Identify What are some ways the government helps protect workers? A by establishing minimum laws, An economy that mixes elements of dif- laws guaranteeing workers’ safety, ferent economic systems is called a mixed economy. In most mixed economies, busi- and laws to protect people from nesses are largely free to operate as they discrimination please. Their operations, however, must Make Judgments Do you think fall within certain regulations set up and that the U.S. government should monitored by the government. The U.S. control parts of our economy? Why or economic system is a mixed economy. why not? Possible answers: Yes— Many of our government’s regulations on business are intended to protect people. without government control some www.CartoonStock.com For example, federal and state companies would take advantage of ANALYSIS SKILL ANALYZING PRIMARY SOURCES have established laws, such as minimum the public by polluting, creat- wage laws, to help protect workers. Some What is the artist’s point of view regarding ing monopolies, and other problems. monopolies? How can you tell? laws guarantee workers’ safety and protect No—the government should stay out people from discrimination. Other govern- ment regulations are intended to protect the of business because it interferes with As a result, most countries that have natural environment. For example, the gov- people’s ability to make a living. market economies have banned compa- ernment sets limits on how many chemicals U.S. Supreme Court Case Studies: nies from creating monopolies. A compa- companies can release into the air or water. Case 10: New Deal Cases ny is said to have a monopoly if it is the These regulations sometimes cost compa- only one selling a product or providing a nies money, which results in higher prices service. A company that holds a monopoly for consumers. At the same time, however, can set any price it wants. This can cause the regulations result in cleaner air and water many problems, especially if the item in and less pollution. question is a necessity. The federal government may sometimes In the United States, monopolies— intervene in business to help control prices. except for certain public —are ille- One way the government does this is by sub- gal. The U.S. government watches busi- sidizing, or giving money to, certain indus- nesses to see that no new monopolies are tries. For example, to make sure that people formed and that consumers are protected. can buy fl our, cereal, and other wheat prod- READING CHECK Finding the Main Idea How ucts cheaply, the government might give are supply, demand, and free enterprise key to a subsidies to wheat farmers. Because they market economy? are receiving money from the government,

456 CHAPTER 17

Critical Thinking: Evaluating At Level Chart the Pros and Cons of Monopolies Answers 1. Ask students to think of a monopoly that is example, a water and sewage monopoly might Analyzing Primary Sources The legal, such as a public company. Have be benefi cial because one company can do the artist does not approve of monopolies students divide a sheet of paper into two job more effi ciently. However, consumers might and refers to their unfair practices: columns and write the name of the monopoly not be able to get the company to improve rigging markets, restraining trade, and at the top of the chart. Have them label the service or lower its prices. suppressing competition. fi rst column Pros and the second Cons . 3. Have students share their charts with the Reading Check In a market economy, 2. Ask students to list reasons that the monopoly class. Visual/Spatial, Verbal/Linguistic supply and demand help determine what is benefi cial in the fi rst column. Have them list Alternative Assessment Handbook: Rubric 13: goods are produced and how much its negative effects in the second column. For Graphic Organizers manufacturers can charge for them; free enterprise allows business owners to make their own decisions. 456 the farmers do not have to charge high prices for their crops. As a result, prices for Comparing wheat products stay low. Economic Systems Command, market, and traditional economies differ in the American Business way goods are produced and sold. Most countries use a mix Think about the companies that made some of two more of these systems. Info to Know of the products you own. What do you know The Microsoft Monopoly In May 1990 about these companies? Most of the products the Federal Trade Commission began you own were probably made by large com- This sign explains to customers that an epic antitrust investigation of the panies. Many of the businesses we deal with they are limited Microsoft , charging that in the United States today are huge. They to only 113 the software company illegally impeded employ millions of people and do business grams of bread all around the world. This has not always per person. competition with unfair pricing and hid been the case, however. codes in its to prevent In the early days of the United States, the use of competitors’ software ap- most businesses were small. They served only plications. On June 7, 2000, after many Command local needs. Few people ever needed to do legal battles, a federal judge ruled that business with people who lived far away. For Microsoft should be divided into two example, a farmer who needed a new piece smaller companies. A year later a fed- of equipment probably only had to travel a eral appeals court reversed the decision, few miles to purchase it. but ruled that Microsoft had broken In the late 1800s, however, larger busi- nesses began to develop in the United States. antitrust laws. In 2001 the Justice De- Improvements in transportation allowed big partment proposed a settlement requir- companies to sell to customers who lived far ing Microsoft to, among other things, away. As businesses became more successful, allow computer manufacturers to decide they gained more money. By reinvesting this Market which Microsoft products to load into money in their businesses, they were able to their computers. The settlement was ap- grow even larger. proved in 2002, but Microsoft still faced Today, big businesses are essential to the anti-trust complaints from other private American economy. Many of the goods and services we use every day could not be pro- companies. duced by small companies. For example, to go.hrw.com produce steel, electricity, automobiles, and Online Resources ships requires large and expensive machines. Only large companies have the resources and KEYWORD: SZ7 CH17 the tools to produce these goods effi ciently. ACTIVITY: The U.S. refer to this ability of large com- Economic System panies to produce many goods effi ciently as the economy of scale. In the last few decades of the 1900s, companies began to grow even larger. Busi- Traditional nesses began to join together to form huge organizations called conglomerates. A con- ANALYSIS glomerate is formed by the merger of busi- SKILL ANALYZING VISUALS nesses that produce, supply, or sell a number How is the United States a mix of different economic systems?

THE ECONOMIC SYSTEM 457

Differentiating Instruction Below Level Learners Having Diffi culty Research Required 1. Tell students that American conglomerates are sold by a conglomerate. Based on their today produce a variety of well-known brand- fi ndings, ask each student to create a chart name products. identifying the company that produces each of 2. To help them understand the role of the fi ve products and if any of the companies conglomerates in their life, have students list are part of a conglomerate. Have students add fi ve products that they buy or use on a regular other companies or products owned by the basis. same conglomerate to their charts. Answers Analyzing Visuals The U.S. 3. Have students conduct research to determine 4. Ask students to share their charts with the class. Verbal/Linguistic government imposes some regulations on whether any of the products on their list businesses, but Americans are generally free to produce, buy, and sell whatever goods and services they choose. 457 PRESS CONFERENCES Close Understanding Publicity In 1997 the federal government charged the Microsoft Discuss with students the structure corporation with violating antitrust laws. To announce of the U.S. economic system and the the trial and its results, both the government and government’s role in regulating it. Microsoft used a powerful tool—the press conference. During a press conference reporters gather to hear An attorney for Review statements from an individual or an organization. They the U.S. Justice generally report the information to the public in news- Department Online Quiz, Section 1 papers, on radio and television, or on the Internet. holds a press conference dur- Quiz Game Often people hold press conferences to express their ing the Microsoft point of view. Press conferences are good publicity tools antitrust trial. Assess because they give people control over the way in which

information is presented. They are an opportunity for ANALYSIS go.hrw.com SE Section 1 Assessment photographs to be taken with a background and SKILL MEDIA INVESTIGATION KEYWORD: SZ7 CH17 Daily Quizzes: Section 1 presentation. What steps would one have to take to hold a press Reteach conference? Main Idea Activities for Differentiated of unrelated goods. For example, a single as big companies get bigger, many small Instruction: Section 1 conglomerate might control communication companies continue to thrive. It is large- systems, insurance companies, hotel chains, ly because of the mix of large and small and many other businesses. The government businesses that the U.S. economy remains monitors conglomerates closely to be sure powerful today. that economic competition is not harmed. Of course, small businesses have never READING CHECK Summarizing What is the U.S. disappeared in the United States. Even economy like today? go.hrw.com Online Quiz KEYWORD: SZ7 HP17 SECTION 1 ASSESSMENT

Reviewing Ideas and Terms Critical Thinking 1. a. Defi ne Write a defi nition for the terms market 4. Summarizing Use your notes and a graphic economy , free market , profi t , scarcity , law of organizer like this one to identify the fi ve economic supply , and law of demand . freedoms that Americans enjoy. b. Analyze Information How are scarcity and the laws of supply and demand connected? 2. a. Defi ne Write a defi nition for the terms free enterprise , capitalism , and monopoly . Economic Freedoms b. Draw Conclusions How do monopolies harm free enterprise? 3. a. Summarize Why is the United States described as a mixed economy? Focus on Writing b. Analyze How is capitalism linked to a market 5. Contrasting Explain how the U.S. economic economy? system differs from the economic system in Cuba.

458 CHAPTER 17

Section 1 Assessment Answers

1. a. market economy, p. 452; free market, vate citizens to invest their money and make p. 452; profit, p. 453; scarcity, p. 453; law of other economic choices. supply, p. 453; law of demand, p. 453 b. When 4. Students should identify the freedoms to a good is scarce, the demand for it is greater buy, sell, earn a living, earn a profit, and own than the supply, and its price might go up. property. 2. a. free enterprise, p. 455; capitalism, p. 455; 5. Students should explain how Cuba’s com- monopoly, p. 456 b. They limit competi- mand economy differs from the American Answers tion and choice and may make a mixed economy. For example, the Cuban necessity too expensive. Media Investigations prepare a government makes all economic decisions. In statement; inform the press 3. a. because it mixes elements of different the United States, people are free to buy and Reading Check It is a mixed economy economic systems b. Capitalism requires the sell products as they choose. with many large and small businesses. freedom of a market economy to allow pri- 458