chapter 2 section 3 Flashcards
(17 cards)
free enterprise
economy where resources are privately owned and competition is allowed to flourish with minimal government interference
difference between capitalism and free enterprise?
capitalism is WHO owns resources, its an ECONOMIC SYSTEM, it stands for the private ownership of resources
free enterprise is HOW resources are used, it’s a PRINCIPLE OR FEATURE, it allows privately owned businesses to use their privately owned resources freely with minimal government interference
five characteristics of a capitalistic free enterprise economy?
economic freedom, voluntary exchange, private property rights, the profit motive, and competition
what is voluntary exchange?
act of buyers and sellers willingly engaging in market transactions
what is economic freedom
you have freedom in buying what you want, getting whatever job you want and choose your employer, leave your job if unsatisfactory
what is private property rights
people may control their possessions as they wish
what is profit motive
people and organizations may improve their material well being by making money
what is competition
producers and sellers compete to attract customers, lowering costs. consumers compete to get the best products at the lowest price
what are entrepreneurs
one of the most important roles in the free enterprise economy
they start new businesses and create products
what do entrepreneurs control?
they organize the factors of production for profit (land, labour, capital)
what is consumer sovereignty
consumers are the rulers of the market
what are the roles of the government
the government is a protector, provider, regulator, and consumer
the role of the government as a protector
the gov enforces laws against things like unsafe food and drugs, false and misleading advertising, environmental hazards, abuse of individual freedom, discrimination against race, gender, age, or religion
role of the government as a provider
it provides a system of national defense and justice. it gives funding to the state and local governments for some programs. they provide education, highways, and public welfare
role of the government as a regulator
preserving competition in the market. overseeing communication, commerce, industries like banking and nuclear power.
it’s role is controversial
role of the government as a consumer
they consume scarce resources to fulfill their roles since those tasks are expensive
mixed economy or modified free enterprise economy
people and business can carry in their economic affairs freely but they are subject to some government interventions and regulations
