1. Characteristics of Free Enterprise Capitalism
A free enterprise economy has both capitalism and free markets.
Characteristics of a capitalistic free enterprise economy include economic freedom, voluntary exchange, private property rights, the profit motive, and competition.
Economic freedom allows you to choose your occupation, employer, and job location.
Capitalism allows voluntary exchange between buyers and sellers.
Private property rights allow people to own and control possessions, which gives them the incentive to work, save, and invest.
The profit motive is largely responsible for the growth of a free enterprise system.
Competition benefits both consumers and the economy.

2. Benefits of Free Enterprise Capitalism
Individual freedom is closely related to economic freedom.
Market economies produce a huge variety of goods.
Market economies adjust daily, mainly through the ever-changing prices of goods and services.
Intense competition in a free market capitalist economy promotes economic progress in the form of a continuing supply of newer and better products.
When more and better products are produced in a free market capitalistic system, wealth is created.

3. Disadvantages of Free Enterprise Capitalism
Periods of uneven economic growth are one of the disadvantages of free enterprise capitalism.
In free enterprise capitalism, the gaps between rich and poor citizens seem to increase.
In free enterprise economies, suppliers tend to combine to avoid competition, which results in fewer participants on the supply side of the market.
Businesses such as corporations have most of the same rights as individuals, but they also have many responsibilities as a result of government-imposed regulations.

4. The Role of the Entrepreneur
Entrepreneurs are important because they are willing to take risks to start new businesses, so they become the catalyst of the free enterprise economy.
Most entrepreneurs fail, but some survive and a few even become wealthy.
Successful entrepreneurs attract other firms to the industry, eventually leading to new products, greater competition, more production, higher quality, and lower prices.

5. The Role of the Consumer
Consumers ultimately determine WHAT to produce.
The term consumer sovereignty reflects the idea that the consumer rules the market.
Consumers play an important role in the American free enterprise economy because their spending helps determine what is, and is not, produced.

6. The Role of Government
Government has become involved in the American free enterprise system because its citizens want it that way.
The government passes laws to help protect citizens from false advertising, unsafe food and drugs, environmental hazards, and unsafe products.
All levels of government provide goods and services for citizens, including education, highways, public welfare, and many others.
The government regulates economic activity to help preserve competition in the marketplace.
The government spends more than all private businesses combined, so it has become a huge consumer in the marketplace.

7. Mixed or Modified Free Enterprise
In a mixed or modified free enterprise economy, people and businesses carry out their economic affairs freely, but are subject to some government intervention and regulation.
The question of how much government involvement is necessary is one of the great unsolved questions of our times.
The American system is a mixed or modified free enterprise economy because the majority of the people want it that way.

8. Economic and Social Goals
The belief in economic freedom is one of the cornerstones of American society.
Economic efficiency is a major goal because resources are scarce and people understand that the factors of production must be used wisely.
Americans have a strong belief in economic equity, which includes justice, impartiality, and fairness.
Unemployment compensation, Social Security, and Medicare are examples of government programs to provide economic security.
Price stability adds a degree of certainty to the future for both businesses and consumers.
Economic growth is a major goal, and new goals develop as society evolves.

9. Resolving Trade-Offs Among Goals
Two significant issues with goals are that they sometimes conflict and that achieving them has opportunity costs.
If trade-offs are political issues, people can help resolve them by voting.
The economic system of the United States is flexible enough to allow choices, accommodate compromises, and still satisfy the majority of its citizens.