Question

Select all the statements which are true about a free enterprise system.

a) (A) The prices of goods and services can change depending on their availability in the market (supply).
b) (B) The prices of goods and services can fluctuate depending on the needs and wants of the consumers (demand).
c) (C) The prices of goods and services are determined by the market.
d) (D) The prices of goods and services are determined by the government

Answer 1

Statements (A), (B), and (C) are true about a free enterprise system, where market forces of supply and demand determine prices for goods and services with minimal government intervention.

Step-by-step explanation:

In a free enterprise system, the dynamics of the market, including the interaction of supply and demand, set the prices for goods and services. This system is characterized by minimal government intervention, with market forces influencing price fluctuations.

Statements (A), (B), and (C) all accurately describe characteristics of a free enterprise system. Prices can indeed change depending on the availability of goods and services, which relates to supply. They can also fluctuate according to the needs and wants of consumers, which correlates to demand. Ultimately, it's the interactions within the market that determine the cost of goods and services. Statement (D), however, is incorrect for a pure free enterprise system, as prices are not determined by the government but by the independent decisions of individuals and businesses within the marketplace.

The benefits of the U.S. free enterprise system include individual freedom for both consumers and producers, a wide variety of goods, responsive prices, various investment opportunities, and the facilitation of wealth creation.