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American Free Enterprise Capitalism Chapter 3 Lesson 1 Characteristics of Free Enterprise Capitalism • Free enterprise economy • Both capitalism and free markets • Characteristics of capitalistic free enterprise economy include • Economic freedom • Voluntary exchange • Private property rights • Profit motive • Competition. Characteristics of Free Enterprise Capitalism • Economic freedom • Choose your occupation, employer, and job location • Voluntary exchange • Between buyers and sellers. • Private property rights • People own and control possessions • Incentive to work, save, and invest. • Profit motive • Responsible for growth of free enterprise system. • Competition • Benefits both consumers and the economy. Voluntary Exchange Economic Freedom Benefits of Free Enterprise Capitalism • Individual freedom = Economic freedom • Vice versa • Market economies • Produce huge variety of goods. • Market economies • Adjust daily - ever-changing prices of goods and services • Intense competition • Promotes economic progress • Continuing supply of newer and better products. • When more & better products are produced - wealth is created Disadvantages of Free Enterprise Capitalism • Periods of uneven economic growth • Gaps - between rich and poor citizens - increasing • Suppliers tend to combine to avoid competition - Monopoly • Results in fewer participants on supply side of market. • Businesses (corporations) have most of the same rights as individuals • Also have many responsibilities - result of government-imposed regulations.