Chapter 19 - The American Economy

What is a free enterprise economy? How does consumer sovereignty affect the free enterprise system?

A free enterprise economy is an economy that allows businesses to compete without government interference. Consumers are sovereign, meaning they can choose to buy whatever products they want. What they choose to buy determines the success or failure of businesses in the competitive market.

Do consumers earn their income in the product market or the factor market?

Consumers earn their wages and salaries in the factor market in exchange for their labor.

How do economists define natural resources?

Economics define natural resources as the "gifts of nature", or the items that makes production a reality. Natural resources can range from water from lakes to trees grown in forests around the world.

Is a pizza oven a capital good or a consumer good? Explain.

No, a Pizza oven is not a consumer good, it is a capital good because it produces a consumer good.

What are the limits of private property rights?

Private property rights do not consider value of money over time.

Name three things that government produces.

The government produces national defense and health-care for our country's citizens.

What are the major functions of the entrepreneur?

The major function of an entrepreneur are productivity, innovation and having the ability to take risks to make profits.

What economic choices will you be free to make upon graduating from high school?

Upon graduating from highschool I will free to make choices such as whether to get student loans, whether to get a credit card, etc.