Question

the american free enterprise system
lesson 1 american free enterprise capitalism
review questions
directions: read each main idea and complete the statements below. refer to your textbook as you write the answers.
a. characteristics of free enterprise capitalism
main idea: the five characteristics of free enterprise capitalism are economic freedom, voluntary exchange, private property, the profit motive, and competition.

1. an economy based on free enterprise has both ____ and ____.
2. economic freedom grants the ability to ____ the things you want and __ where and for whom you want. businesses can __ the workers they want and are free to ____ success or failure.
3. in a ____ exchange, buyers acquire items they believe are worth __ than or __ to the money charged, while __ believe the money received is as __ as the product sold. both parties believe they ____ from the transaction.
4. in a capitalistic system, people can do whatever they choose to their property due to ____ __. additionally, they have the opportunity to __ and ____ based on the value of their property.
5. the ____ __ drives producers to improve their __ well - being. because of this, the lure of __ ____ guarantees a constant supply of goods and services from all kind of producers.
6. capitalism helps ensure ____ resources are used efficiently by promoting ____ among producers.

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Explanation:

The questions relate to the core characteristics of free enterprise capitalism, which is a key concept in economics. Each blank is filled based on standard definitions of this economic system.

1. The main defining features of a free enterprise economy are private property rights and the profit motive, as outlined in the provided main idea.
2. Economic freedom allows individuals to purchase/consume desired goods and resources, and businesses to hire workers and decide production/distribution details, with success/failure tied to their choices.
3. Voluntary exchange relies on buyers valuing an item at least as much as the price, and sellers valuing the price at least as much as the item, with both parties gaining benefit.
4. Capitalism's private property rights let people control their property, and they can profit or earn income based on its value.
5. The profit motive drives producers to improve their well-being, and competition ensures a steady supply of goods/services.
6. Capitalism promotes efficiency through competition among producers, which allocates resources well.

Answer:

1. private property rights; the profit motive
2. purchase/consume; hire; choose; experience
3. voluntary; at least equal; sellers; at least equal; gain benefit
4. private property rights; profit/earn income
5. profit motive; financial well-being; competition
6. that scarce; competition