From Common Sense Economics eBook: What Everyone Should Know about Wealth and Prosperity:
Investment and improvements in technology do not just happen. They reflect the actions of entrepreneurs, people who take risks in the hope of profit. No one knows what the next innovative breakthrough will be or just which production techniques will reduce costs. Furthermore, entrepreneurs are often found in unexpected places. Thus, economic progress depends on a system that allows a very diverse set of people to test their ideas to see if they are profitable and, simultaneously, discourages them from squandering resources on unproductive projects.
For this progress to occur, markets must be open so that individuals are free to try their innovative ideas. An entrepreneur with a new product or technology needs to win the support of only enough investors to finance the project. But, competition must be present to hold entrepreneurs and their investors accountable for the efficient allocation of their resources. Their ideas must face the “reality check” of consumers who will decide whether or not to purchase a product or service at a price above the production cost. In this environment, consumers are the ultimate judge and jury. If they do not value an innovative product or service enough to cover its cost, it will not survive in the marketplace.
- What would our world look like without entrepreneurs? What things might we not have available to us today if there had been no entrepreneurs in the past 100 years?
- Do you think of yourself as an entrepreneur? What do you think are the traits that make someone an entrepreneur?
- Entrepreneurs seek profits. Do you think it is fair that some people have gotten really rich through their creations?
- Leaving aside the question of what they do with their wealth, do you think people like Mark Zuckerberg “earned” their wealth? Or was it just luck?
This reading is an excerpt from Certell’s Common Sense Economics eBook. Certell offers curriculum materials and eBooks free of charge for students and teachers. Click Here to download the Common Sense Economics Materials.
6 Mar. 2018, Children with Lemonade Stand [Digital photoprahp]. Retrieved from <google.com>