Standard 2 Indicator 2.4 LAP 15

Meet people's needs. Every society must develop a system for making decisions as to how it will use its resources to meet the needs and wants of the people. The system must answer the three basic economic questions of what will be produced, how it will be produced, and who will consume it. Having a system does not minimize the risk of decision-making or prevent problems from developing. Controlling production would not be a goal in every society.

• A. Oslo

• B. Rome

• C. Agra

• D. Paris

In a private enterprise system, businesses and individuals own or control the economic resources. All citizens play a role in determining what will be produced, how it will be produced, and who will consume it. These decisions are not controlled by government agencies, influential citizens, entrepreneurs, or producers.

• A. Oslo

• B. Rome

• C. Agra

• D. Paris

People can buy anything they can afford that can legally be sold. The marketplace is any place where buying and/or selling of products takes place. People can buy anything that can legally be sold-as long as they have the money for it. In a private enterprise system, the markets are self-regulated and self-controlled. The government's role is limited. Owning things of value and deciding how to use those things are characteristics of private property. Freedom in the marketplace does not ensure that businesses will use resources efficiently.

• A. Oslo

• B. Rome

• C. Agra

• D. Paris

Private property is anything of value that people own. It can be business or personal property. Other examples of private property include land, jewelry, buildings, and clothing. Economic resources are the human and natural resources and capital goods used to produce goods and services. Capital goods are manufactured or constructed items that are used to produce goods and services. Equal distribution of goods and services is not possible, even in economic systems set up for that purpose.

• A. Oslo

• B. Rome

• C. Agra

• D. Paris

When people are free to own things that they value, they tend to save and invest. Individuals and businesses benefit because they are free to decide how to use their private property and when and how to sell it. Society benefits because people pay taxes on their savings and investment income, and this provides the money needed to pay for public services, such as schools and highway construction. Our own choices limit us. If we choose to buy one thing, we may not have enough money to buy another. Freedom to own private property does not ensure cooperation among businesses. Although people in a private enterprise system have a great deal of economic freedom, they aren't allowed to do anything they want to do.

• A. Oslo

• B. Rome

• C. Agra

• D. Paris

The private enterprise system in the United States is not a pure private enterprise system because there is limited government control. The government's primary purpose is to protect its citizens. However, the role of government has expanded as life has become more complex. The government acts as a referee and ensures that individuals and businesses play by the rules.

• A. Oslo

• B. Rome

• C. Agra

• D. Paris

In the United States, the government should step in only to protect citizens, and it should let them pursue their own goals. As life has become more complex, the role of government has gradually expanded. The government has been asked to solve such problems as inflation, pollution, health care, and unemployment. It does not, however, try to increase production, limit business startups, or maintain control of prices except in what are considered emergency situations.

• A. Oslo

• B. Rome

• C. Agra

• D. Paris

Competition, the rivalry among businesses to attract scarce customer dollars, results in a variety of benefits. These benefits include better prices, better credit options, improved and new goods and services, and better service. Limited government control is a characteristic of a private enterprise economy. The government collects taxes to obtain funds needed to operate the system. Inflation is a rapid rise in prices usually occurring when demand exceeds supply.

• A. Oslo

• B. Rome

• C. Agra

• D. Paris

The profit motive is the desire to make a profit which moves people to invest in business. It forms the economic basis for the private enterprise system. If a business did not make a profit, it would eventually cease to exist. A marketplace is any place where the buying and/or selling of goods and services takes place. Competition is the rivalry between two or more businesses to attract scarce customer dollars. The law of supply and demand is the economic principle which states that the supply of a good or service will increase when demand is great and decrease when demand is low.

• A. Oslo

• B. Rome

• C. Agra

• D. Paris

The U.S. private enterprise economy is often called a price-directed system because price determines what consumers buy, which jobs they will take, the success or failure of businesses, and the types of products that will be produced. Prices are important in making the system work correctly. The U.S. economic system is not pure or controlled. Instead, it is considered a mixed economy because there is limited government control. An entrepreneur is someone who goes into business for him/herself. This is not a type of economic system.

• A. Oslo

• B. Rome

• C. Agra

• D. Paris