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6 Characteristics of the American Economy
Transcript of 6 Characteristics of the American Economy
Profit Incentive is basically the desire to make a profit. It motivates entrepreneurs to produce new goods and services to possibly get more profit. Thus leading a always evolving economy. An example would be the iPhone creating multiple phones with different features from other phones.
Capitalism or laissez-faire is when the government has a very limited role on the American economy. Essentially the businesses and individuals decide what is made and bought and for what price. An example of Capitalism now is being able to buy out a certain business without government intervention.
Freedom of Enterprise
Free-enterprise system is when individuals are free to own and control the factors of production. However the government places certain legal restrictions such as child labor laws and hazardous waste disposal rules. An example is tobacco businesses having to put warning labels on the product and people still buy it.
Competition is when there is a rivalry among producers of similar products to more business. To do this they will lower the prices and make higher quality goods. Forces businesses to keep prices low enough to attract buyers but high enough to make a profit. An example would be if McDonalds lowers the price for a burger so people go there instead of Burger King.
Private property is goods that is owned by individuals rather than businesses and the government. The owner gets to decide when, where, and by whom the product is used. An example would be someone who owns land and doesn't allow people on the land cause he chooses who can use it.
Freedom of Choice
Instead of sellers making the decisions on what is produced the buyer instead decides. If a studio releases a movie and not a lot of people go to see the movie the studio will probably not use the same director again since the buyers did not like his work.