What are the four important distinctives of free-enterprise economies?
Most free enterprise systems consist of four components: households, businesses, markets and governments. Households—the Owners. In a free enterprise system, households—not the government—own most of the country’s economic resources and decide how to use them. One of the resources that households possess is their labor, which they sell to existing firms or use to form new businesses. In addition to selling their resources where they can get the highest price or largest profit, households also act as consumers. The wages and salaries of households purchase about two-thirds of all the production in the United States. Consumers vote with their dollars, thereby directing production toward the goods and services they want businesses to provide. This is called consumer sovereignty. Businesses—the Organizers. Businesses organize economic resources to produce a good or service. The people who start businesses are called entrepreneurs. They are the organizers and innovators, constantly discover
