CHAPTER 1
(MACRO CHAPTER 1; MICRO CHAPTER 1)
The Wealth of Nations: Ownership and
Economic Freedom
FUNDAMENTAL QUESTIONS
1. Why are some countries rich while others are dirt poor?
OVERVIEW AND OBJECTIVES
The primary purpose of this chapter is to explore the reasons for the differences in wealth from one
nation to another.
A unique feature of this chapter is that historical examples are used to illustrate the importance of
private ownership. The chapter also focuses on the significance of economic freedom on a nation’s
standard of living.
After reading and reviewing this chapter, the student should be able to:
1. Discuss reasons for differences in wealth from one nation to another.
2. Define private property rights.
KEY TERM REVIEW
economic freedom
private property rights
LECTURE OUTLINE AND TEACHING STRATEGIES
I. Ownership
Ownership is crucial for economic success.
A. Anecdotes about ownership: Examples of starvation in Xiaogang and the Virginia colonies
2 Chapter 1: The Wealth of Nations: Ownership and Economic Freedom
B. Private property rights: Ownership; the right to do anything you want with what you own as
II. Economic Freedom
Economic freedom is the ability to engage in voluntary trade without interference or restrictions
by government or outside parties.
A. Index of economic freedom: An attempt to measure how much free, voluntary trade is
OPPORTUNITIES FOR DISCUSSION
1. Why is economic freedom important?
2. How does ownership stimulate economic progress?
ANSWERS TO EXERCISES
1. Private property rights reflect ownership and the right to do anything you want with what you own
as long as it does not harm the property of others. The question of whether you own yourself has
2. Laws prohibit a person from putting anything they want into their bodies, such as illegal drugs.
Since one’s body is not the equivalent of other property, no violation of private property rights has
occurred.
Chapter 1: The Wealth of Nations: Ownership and Economic Freedom 3
4. The nation probably lacks secure private property rights and economic freedom, the most
important explanations for a country’s wealth.
ACTIVE LEARNING EXERCISE
This exercise offers students the opportunity to use their graphing skills in preparing a simple double
bar graph and is an excellent lead-in to the chapter appendix. Emphasis should be placed on basic
graphing skills and interpretation of results.
Materials Needed:
One bag of colored candies for each student
While individual student results will differ, the instructor should use the opportunity to compare graphs
and discuss the concepts of various graphing techniques.