How does the american economy incorporate the main characteristics of a free enterprise economy?

characteristics of free enterprise capitalism

The American economy incorporates the main characteristics of a free enterprise economy.

Economic Freedom

• Economic freedom means more than being able to buy the things you want.
  
• It means that you have the freedom to chose your occupation, your employer, and your job location.
  
• Businesses also enjoy considerable economic freedom.
  

Voluntary Exchange

• A second characteristic of capitalism is voluntary exchange - the act of buyers and sellers freely and willingly engaging in market transactions.
  
• Voluntary transactions benefit both the buyer and the seller.
  

Private Property Rights

• Another major feature of capitalism is private property rights, which allow people to own and control their possessions as they wish.
  
• People have the right to use or even abuse their property as long as they do not interfere with the rights of others.
  
• Private property gives people the incentive to work, save, and invest.
  

Profit Motive

• Under free enterprise capitalism, people are free to risk any part of their wealth in a business venture.
  
• Profit is the extent to which persons or organizations are better off financially at the end of a specific period than they were at the beginning.
  
• The profit motive - the incentive that encourages people and organizations to improve their material well being - is largely responsible for the growth of a free enterprise system.
  

Competition

• Capitalism thrives on competition - the struggle among sellers to attract consumers.
  
• Competition is possible because individual entrepreneurs have the freedom to produce the products they think will be the most profitable.
  

the role of the entrepreneur

Entrepreneurs are the driving force of the free enterprise system.

The entrepreneur plays one of the most important roles in the free enterprise economy. The entrepreneur organizes and manages land, capital, and labor in order to seek the reward called profit.
Despite the high rate of failure among entrepreneurs, the dream of success is often too great to resist. The entrepreneur is both the spark plug and the catalyst of the free enterprise economy. When an entrepreneur is successful, everybody profits.
In the end, the entrepreneur's search for profits can lead to a chain of events that brings new products, greater competition, more production, higher quality, and lower prices for consumers.

the role of the consumer

The economy in the United States adapts to consumers' wants.

Consumers have the power in the economy because ultimately they determine which products are produced. The term consumer sovereignty recognizes the role of the consumer as sovereign, or ruler, of the market. The phrase "the customer is always right" reflects this power. In addition, consumer's wants change constantly as people are exposed to new ideas and products. 

the role of government

The economic role of the U.S. government is decided by its citizens.

Protector

• As protector, the United States government enforces laws such as those against false and misleading advertising, unsafe food and drugs, environmental hazards, and unsafe automobiles.
  
• It also enforces laws against abuses of individual freedoms.

Provider

• All levels of government provide goods and services for citizens.
  
• The national government supplies a system of justice and national defense.

Regulator

• In its role as a regulator, the national government is charged with preserving competition in the marketplace.
  
• many state governments oversee insurance rates, while local governments regulate economic activity with building and zoning permits.
  
• The regulatory role of government is controversial.
  
• Most businesses do not like to be told how to run their affairs.

Consumer

• The tasks of protecting, providing, and regulating are expensive.
  
• All levels of government, like any business, consume scarce resources to fulfill their role.

Modified Free Enterprise

• Perhaps an unintended consequence of government's role as protector, provider, regulator, and consumer is the emergence of the mixed, or modified free enterprise economy.
  
• In this economy, people and businesses carry on their economic affairs freely, but they are subject to some government intervention and regulation.
  
• Some people prefer to have no government involvement in the economy, but this is not possible.
  
• After all, some services, such as national defense and system of laws and justice, cannot be supplied by the private sector alone.
  

What are the characteristics of American free enterprise?

Why is the US economy considered to be a free enterprise economy?

How does a free enterprise economy's freedom of producers provide benefits for individual consumers?

How does a free enterprise economy provide opportunities for individuals?