| A | B |
|---|
| What philosophy was our economic system based on? | Free enterprise system |
| List the basic principles of a free enterprise system. | Freedom of ownership, competition, risk, and profit. |
| Define competition. | The struggle between companies for customers |
| Better-quality goods and services at reasonable prices are the results of what? | Competition |
| What are the two basic ways business compete? | Price competition and nonprice competition. |
| What kind of activity is it engaged in when a business choose to competes on the quality of the products, service and financing, business location, and reputation? | Nonprice competition. |
| Define monopoly. | An exclusive control over a product or the means of producing it. |
| Why are monopolies prohibited under a free enterprise system? | They preclude competition that helps lower the price and improve products. |
| Define risk. | The potential for loss or failure. |
| How is risk perceived in relation to the potential for improved earnings? | As the potential for earning gets greater, so does the risk. |
| Give some examples of risk. | New competition & development of new products |
| What incentive do people have that would make them risk their money on business ventures? | Profit |
| How is profit calculated? | The money earned from conducting business subtracts all the costs and expenses. |
| What are some of the economic cost of unprofitable firms? | Less taxes pay to the government, unemployment increases, and the cost of social services rises. |
| List the various roles government plays in our free enterprise system. | Provider of Service, Supporter of Business, Regulator, and Competitor |
| What is the Joint Raining Partnership Act (JTPA) created for? | A government activity that provide retraining for people who have lost their jobs as a result of changes in the marketplace. |
| What kind of service does the Small business Administration (SBA) provide? | It provides counseling and educational materials to prospective business owners to help ensure their success. |
| What do our government do to encourage more global business activity? | Our government establishes trade alliances and agreements with other countries. |
| What are some of the government regulatory agencies that protect consumers and workers? | Food and Drug Administration (FDA), Equal Employment Opportunity (EEOC), Occupational Safety and Health Administration(OSHA), and Consumer Product Safety Commission(CPSC) |
| What is a licensing agreement? | An agreement protects the originator's name and products. |
| What law is enacted in 1890 to prevent monopolies? | Sherman Antitrust Act |
| 22. Why was there a second law passed in 1914 to control monopolies, and what is it called? | The Clayton Antitrust Act was passed to reduce loophole in the Sherman Antitrust Act. |
| What agency was established to enforce both of the antitrust laws and investigate deceptive business practices? | Federal Trade Commission (FTC) |
| What is one method that the government can stimulate our economy? | Setting the interest rate |
| What is the role of an consumer? | Decision maker of the demand, price of a product and which businesses survive |
