Questions On page 51
1. What is a good title for this illustration?
A good title would be "The Divisions of Capitalism" or as the book suggested, "Capitalism: The U.S. Free Enterprise System."
2. What evidence is given in the drawing that justifies calling the U.S. economic system a free enterprise system?
In the drawing, the pillars have different properties of the U.S. Capitalism system that suggest a free enterprise. Private property, private enterprise and consumer sovereignty all refer to an economic system that is controlled by the public. Unlike in communist countries where the concept of owning private businesses is against the law, in the U.S. people are free to own land, houses, and other items. This all contributes to a Free Enterprise System where anyone can join if they choose to.
3. What are the 6 main principles of the US free enterprise system that are shown in the drawing?
The six main principles are: Private Enterprise, Competition, Rule of Law, Private Property, Profit Motive and Consumer Sovereignty.
4. What information would you add to indicate the United States has a mixed market economy?
The information I would further include, would be some examples of businesses and companies that do well under the U.S. mixed market economy and describe how they followed the practices of a free market enterprise system.
Definitions On page 50
Capitalism
An economic system based on the private ownership of the means of production, or money, and distribution of goods.
Free Enterprise
The freedom of private businesses to operate competitively, for profit, without government controlling it.
Profit Motive
The incentive, or determination, a person has to work, to gain something in return, i.e. profit.
Competition
When two or more businesses compete to gain customers.
Private Property
Property that is recognized as those things that are in the possessions of a person or group (assets).
Retailers
Businesses that sale goods or merchandise, from a fixed location such as a department store or kiosk, for the direct consumption by the purchaser.
Wholesalers
Businesses that sell goods/merchandise to retailers, to industrial, commercial, institutional, or other professional business users.
Public Property
The property owned by the government for the use of the public.
Gross Domestic Product (GDP)
The value of all goods and services produced within a nation in a given year.
Invisible Hand
The idea that the free interaction of people in a market economy leads to a desirable social outcome.
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