Chapter 3 Test Lists

Question 1

Five important characteristics of a capitalistic free enterprise economy

Answer 1

1) Economic Freedom-To buy the things you want, to choose your occupation and employer
2) Voluntary Exchange- The act of buyers and sellers freely exchanging goods
3) Private property rights- The right to own and control your own possessions
4) Profit Motive- The incentive to improve ones material well being
5) Competition- The struggle among sellers to attract consumers

Question 2

List the 5 benefits of Free enterprise

Answer 2

1) individual freedom to choose
2) A variety of goods
3) Adapting to change
4) Promoting progress
5) Creating of Wealth(GPD)

Question 3

Name the 2 major disadvantages of a free enterprise

Answer 3

1) Uneven economic growth (recessions and depressions)

2) Growing Gaps between rich and poor

Question 4

Name the 3 roles/Responsibilities in free enterprise

Answer 4

1) Role of the Entrepreneur- the spark plug and the catalyst of the free enterprise economy
2) Role of the consumer- They determines what to produce.
3) Role of the Government (plays limited role)
a. Protect the ppl
b. provide services for the people
c. regulate business
d. Consumer of goods