Untitled Flashcards Set

What is free enterprise?

An economic system in which privately owned businesses operate for a profit with limited government intervention.

What is voluntary exchange?

Economic action done by free choice.

What are private property rights?

A fundamental feature of capitalism allowing individuals to own and control their possessions.

How is profit measured?

Profit is the extent to which persons or organizations are better off at the end of a period than they were at the beginning, usually measured in dollars.

What is the profit motive?

The driving force that encourages people and organizations to improve their material well-being.

What does competition refer to in economics?

The struggle among sellers to attract consumers.

What are biofuels?

Fuel made from organic materials like wood, corn, tires, and other waste.

What was the Great Recession?

A severe economic downturn that lasted from late 2007 through mid-2009.

What is an incentive?

Something that motivates individuals to take action.

What are the main characteristics of a free enterprise economy?

Economic freedom, voluntary exchange, private property rights, profit motive, and competition.

What is the relationship between individual freedom and economic freedom?

Individual freedom is closely related to economic freedom.

How do market economies benefit consumers?

They produce a huge variety of goods and adjust daily through changing prices.

What can intense competition in a free market capitalist economy promote?

Economic progress through a continuing supply of newer and better products.

What is a disadvantage of free enterprise capitalism regarding economic growth?

Periods of uneven economic growth.

What issue can arise in free enterprise economies related to income distribution?

The gaps between rich and poor citizens tend to increase.

What happens when suppliers combine in a free enterprise economy?

It results in fewer participants on the supply side of the market.

What are the responsibilities of businesses such as corporations in a free enterprise system?

They have many responsibilities as a result of government-imposed regulations.