1.4 Business as an Economic System Flashcards
Economic System
defined as an arrangement using land, labour, and capital to produce, distribute, and exchange goods and services to meet the needs and wants of people in society.
Capitalism
An economic system that allows for private ownership of the means of production and assumes that economic decision making is in the hands of individuals or enterprises who make decisions expecting to earn a profit. An early advocate of capitalism was Adam Smith.
Free Enterprise System
An economic system characterized by ownership of private property by individuals and enterprises, the profit motive, a competitive market system, and a limited involvement by government. Also referred to as the private enterprise system.
Laissez-Faire Capitalism
An economic system operating with absolute minimum interference by the government in the affairs of business. Government involvement is strictly limited to providing essential services such as police and fire protection.
Responsible Enterprise System
An economic system operating as a free enterprise system but incorporating the element of accountability. This definition implies that business enterprises are responsible to society for their actions and are answerable or accountable for being the cause, agent, or source of something.
