Lesson 3: U.S. Economy and Free Enterprise System

What is a key feature of the free enterprise system?

• Government control of all businesses

• Freedom to choose how to use private property

• Mandatory profit sharing with the government

• Elimination of private property

What is a founding principle of the U.S. economy?

• Centralized economic planning

• Free enterprise

• State ownership of resources

• Fixed pricing by the government

How does limited government influence the U.S. economy?

• By controlling all economic activities

• By allowing more freedom for businesses

• By owning all private properties

• By eliminating competition

What role does competition play in the U.S. economy?

• It reduces the quality of products

• It leads to higher prices

• It encourages innovation and better services

• It eliminates small businesses

How does private property ensure resources are used?

• It ensures resources are always put to productive use.

• It ensures resources are wasted.

• It ensures resources are never used.

• It ensures resources are only used by the government.

How does profit incentive benefit employees and customers?

• It creates a hostile work environment.

• It is only beneficial for business owners.

• It is good for both employees and customers.

• It increases product prices.

What does the profit incentive encourage people to do?

• Avoid new ventures.

• Take risks and create new businesses.

• Focus only on existing products.

• Reduce market competition.

Which statement is true about profit incentive?

• It only benefits large corporations.

• It is detrimental to customer satisfaction.

• It motivates people to innovate.

• It discourages employee engagement.

How does competition affect the quality of products?

• It decreases quality

• It has no effect

• It improves quality

• It makes quality unpredictable

What is a result of more efficient use of resources due to competition?

• Increased waste

• Better resource management

• Higher costs

• Less innovation