Understanding Free Enterprise System

What is another name for the free enterprise system?

• Communism

• Capitalism

• Socialism

• Totalitarianism

What is a characteristic of a free enterprise system?

• Government control of resources

• Private ownership of factors of production

• Limited consumer choice

• State-controlled businesses

In a free enterprise system, who has the right to start a business?

• Only government officials

• Only wealthy individuals

• Anyone

• Only large corporations

Which of the following is an example of the government’s role in a free enterprise system?

• Dictating the prices of goods

• Protecting or encouraging competition

• Preventing businesses from starting

• Providing all goods and services

What does "legal equality" mean in a free enterprise system?

• Everyone has the same economic rights under the law

• Only business owners have legal rights

• The government owns all property

• Certain people have more rights than others

What is the “profit motive” in a free enterprise system?

• The desire to lose money

• The incentive to gain from economic activities

• The ability to avoid taxes

• The requirement to donate to charity

Which of the following is an example of a public good?

• A private gym membership

• National defense

• A personal computer

• A concert ticket

What is a “free rider” in the context of public goods?

• A person who pays for the service

• A person who benefits from a good but does not pay for it

• A person who provides the service

• A person who refuses to use public goods

What is an example of an externality?

• The profit a business makes from selling a product

• A factory that causes pollution affecting the surrounding community

• A consumer buying a product from a store

• A producer offering a discount on a product

Which of the following is an example of a positive externality?

• A factory causing pollution

• A local college benefiting the local businesses

• A consumer buying a product for personal use

• A company raising its prices