Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which system allows economic agents the freedom to own property and engage in commercial transactions?

1. Free Market

2. Free Enterprise

3. Equilibrium Price

4. Government Policy

The correct answer is: Free Enterprise

The correct answer is Free Enterprise, as it is a system that emphasizes individual rights to own property and engage in commercial transactions with minimal government intervention. In a Free Enterprise system, businesses and consumers are allowed to make their own decisions regarding the production, distribution, and consumption of goods and services, promoting innovation and competition within the marketplace. This system supports economic efficiency by allowing resources to flow toward where they are most valued, as individuals and businesses respond to market signals, such as prices and demand. Entrepreneurs are incentivized to take risks to create new products and services, which can lead to economic growth and improved living standards. In contrast, while a Free Market refers to an economy where prices and production are driven by supply and demand, the term "Free Enterprise" encompasses the broader principles of private property rights and voluntary exchanges that underpin a market-driven economy. Equilibrium Price relates to the balance between supply and demand in a market but does not capture the essence of individual ownership and economic freedom. Government Policy often involves regulations and interventions that can limit or guide economic activities, which is contrary to the concept of Free Enterprise.