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1. World HistoryIndustrial RevolutionFulton/Westerfield

   Chapter 13 Section 3 Notes
2. Quiz on Day 1 and 2 Look over your notes.
3. Capitalism is an economic system in which individuals or corporations and not the government control the factors of production. In this system, the businesses and the means of production are privately owned and operated. By the late 1800s, western European countries and the United States were characterized as having this kind of economies. Capitalism and Changing production Methods
4. Factory owners divided the manufacturing process into steps Unskilled labor was used and was assigned a step along the way of making a finished product Machinery made it possible for workers to produce more in a shorter period of time and lowered the cost of production and allowed for greater profits for the factory owners. Eli Whitney, the inventor of the cotton gin, used a division of labor to make muskets in the late 1700s. He invented machines that allowed for the use of interchangeable parts which meant that unskilled workers could make many identical and inexpensive muskets that could be easily repaired Division of Labor and Interchangeable Parts
5. The system of producing large numbers of identical items is called mass production. The assembly line, use of interchangeable parts, and division of labor are essential to mass production. By using an assembly line, workers did not move to a different location to make each part. The parts are now carried from worker to worker, and each worker performed a certain task. This saved time and energy and allowed for greater production from each worker. The Assembly Line
6. Henry Ford saw great potential in the assembly line and used it to make the automobile industry one of the largest industries in the world. The assembly line was not just limited to cars. American and European industrialists began to mass-produce items such as clothing, furniture, and machinery. By reducing production costs, prices fell and more people could afford to buy a greater variety of goods and have a higher standard of living. The Assembly Line
7. Most businesses before the Industrial Revolution were very small. A business that is owned and run by one person is called a sole proprietorship. A business owned and run by two or more people is called a partnership. Owners in both types of businesses were responsible for any debts the business had. As businesses grew, businesses formed corporations and allowed people to buy stock, or a share, in their companies. This made it easier to raise money to run and expand a business. A person who owns a piece of the company is called a stockholder and his financial responsibility was limited to the amount he invested. Rise of Corporations
8. Corporations could sell goods at much lower prices than small businesses, often forcing the smaller businesses to either sell out to the large corporations or to fail. As a result of this, corporations grew in size, and the number of corporations in in some industries decreased. Often this was because a corporation gained complete control over the production or sale of a single good or service. This kind of control is referred to as a monopoly. Sometimes giant corporations would combine to control every stage of an entire industry. This is called a cartel, or in the United States it was referred to as a trust. The Rise of Corporations
9. The Industrial Revolution brought with it alternating periods of prosperity and decline. This pattern is called the buisness cycle. Success or failure of one industry often had an impact on other industries. If there is a rising demand for goods, then the demand for machines to make those goods goes up. However, a decline in demand for goods would result in a loss of jobs and incomes in other industries because workers would be laid off because not as many people are demanding those goods. Business Cycles