The Free Market Business governed by the laws of supply and demand, not restrained by government interference, regulation or subsidy. "Laissez-Faire" Capitalism Physiocrats
The LAW OF SUPPLY The Law of Supply states that the quantity of a good supplied rises as the market price rises, and falls as the price falls
Law of Demand The Law of Demand says that the quantity of a good demanded falls as the price rises, and rises as the price falls.
Equilibrium Price The market price at which the supply of an item equals the quantity demanded .
American Capitalism: A Short History <ul><li>American Revolution was caused partly by Britain’s policy of Mercantilism </li></ul><ul><li>Framers of the Constitution were gentry and merchants </li></ul><ul><li>Admired Adam Smith’s Wealth of Nations </li></ul>
The U.S. Constitution <ul><li>Federalism limited power of States on economic matters </li></ul><ul><li>Limited the power of Federal Government to tax, regulate, spend. </li></ul><ul><li>Protected the Right of Property - 5th Amendment </li></ul>
Chief Justice John Marshall <ul><li>Ruled consistently in favor of free-markets over regulation by states </li></ul><ul><li>Ruled against grants of monopoly by states </li></ul><ul><li>Ruled for Federal power over State’s Rights </li></ul>