The American Free Enterprise System

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Free contract means that people can choose

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for themselves what legal agreements to enter into

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The incentive to improve material well-being by seeking to gain from economic activities is called

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profit motive

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Individual booksellers that have completed well against chain booksellers have often:

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focused on local needs

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In the marketplace, producers are looking to

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earn a profit

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Producers determine the allocation of scare resources by seeking

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profits and responding to consumer votes on a product

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Typically, when households are shown on the right side of a circular flow model of a modified free enterprise, businesses are located

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on the left

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The center of a typical circular flow model showing a modified free enterprise is occupied by

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government

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In the resources market of modified free enterprise, the government buys

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productive resources

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The money left after production costs are subtracted from revenue is called

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profit

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A market failure occurs when people who are not part of a marketplace interaction

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benefit from it