Chapter 18 The Private Enterprise System - Pretest

Private enterprise is an economic system in which

• a national planning board assumes all responsibility.

• the government owns major industries, and individuals own consumer goods.

• individuals own both major industries and consumer goods.

• the government owns major industries as well as all consumer goods.

One of the advantages of a market economy is

• freedom of competition.

• absence of taxes.

• government control.

• assigned occupations.

The major incentive for going into business in the private enterprise system is called

• the marketplace.

• competition.

• private property.

• the profit motive.

Which of the following is a false statement about the freedom to own, use, buy, and sell private property in a private enterprise system:

• People can decide how the things they own will be used.

• People need a government permit to make a sale.

• People are free to buy anything that can legally be sold.

• People are free to decide how to spend their income.

In a private enterprise economic system, success or failure of businesses is largely determined by

• the marketplace.

• market strategy.

• promotion.

• the government.

An individual who assumes the risk of starting and operating a business is called a(n)

• manager.

• society.

• economist.

• entrepreneur.

People who are free to make personal economic choices often work harder, which results in

• increased production.

• expanded poverty.

• higher inflation.

• more unemployment.

Economic freedom in a private enterprise system is limited by laws that have been created to

• control competition.

• establish prices.

• protect everyone.

• regulate profit.

The freedom to own private property allows people in a private enterprise economy to earn the income they need to

• work together.

• live independently.

• function in a group.

• share experiences.

Although private enterprise is a productive economic system, a problem it has not been able to eliminate is

• profit.

• freedom.

• poverty.

• competition.