Identify the basic philosophy and characteristics of a free enterprise system.

Identification should include the following characteristics of free enterprise: 

• Freedom to own a business
• Limited government control of privately owned businesses
• Freedom of choice
• Right to own private property
• Right to make a profit
• Freedom to take risks
• Competition
• Freedom to charge any amount for a good and/or service (with supply and demand as the regulating factors)
• Freedom to purchase a good and/or service at any price (with supply and demand as the regulating factors)

Identification should also include the importance of entrepreneurship, profit motive, and independence of businesses from government, as well as the role of governmental regulatory agencies, in a free enterprise system.

Process/Skill Questions:

• What are the four components of the free enterprise system?
• How is each characteristic of a free enterprise system essential in helping to make the system work?
• How can government limit freedom of business ownership in a free enterprise system?
• What are the advantages and disadvantages of entrepreneurship in a free enterprise system?
• Who benefits from entrepreneurship: business, government, society? Explain why.