Private Enterprise System

These flashcards cover key concepts related to the private enterprise system, its characteristics, advantages, and disadvantages.

Private Enterprise System

An economic system where individuals and businesses, not the government, control the economic resources and make decisions regarding the production of goods and services.

Economic Questions

The three basic questions every economic system must answer: What goods and services will be produced? How will these goods and services be produced? For whom will these goods and services be produced?

Market Economy

Another name for a private enterprise system, where markets, not the government, answer economic questions.

Private Property

Anything of value that people own; can include business property or personal property, and includes the ownership of profits from one's own labor.

Competition

The rivalry between businesses to attract customers; requires efficient use of resources to remain viable.

Profit Motive

The desire to make a profit, which drives individuals and businesses to invest and take risks.

Price-Directed System

A system where prices determine consumer buying decisions and the success of businesses.

Economic Freedom

The ability for individuals to make personal economic choices, including setting their own goals and choosing their work.

Disadvantages of Private Enterprise System

Negative aspects of the system, including periods of unemployment, poverty, and unequal distribution of wealth.

Limits to Economic Freedom

Restrictions on economic choices due to competition among buyers, personal choices, laws, and taxes.