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CH 1] Business 101 1-21

2. Discuss competition, the entrepreneur and their role in a private enterprise system.
Competition is the battle among businesses for consumer acceptance. It is a critical
aspect of the private enterprise system. An entrepreneur is the risk taker in this type of 1
economic system. Profits are the rewards for a successful entrepreneur.
3. Explain the basic rights of the private enterprise system. Certain basic rights are
available to citizens living in a private enterprise economy: the right to private property;
the legal and ethical right to any profits that might result from an enterprise; the freedom
of choice in purchases, employment, and investments; and the right to set ground rules
for competitive activity.
4. Outline the factors of production, the levels of productivity and discuss extracting
Entrepreneurship. Four factors of production provide the necessary inputs for the
operation of private enterprise: natural resources, labor, capital, and entrepreneurship.
Each factor receives a payment, such as rent, wages, interest, or profits. The levels of
productivity explain the relationship of meeting consumer demands. Recognizing that
primary production deals with farms, forestry, fisheries, and the natural mineral wealth
of a land. That primary production gives the input to secondary producers, the
manufacturing and processing industries which supply tertiary producer, the retail sales
outlets for our products that are purchased by the ultimate consumers.
5. Discuss the concepts of gross domestic product and productivity. Gross domestic
product—the sum of all goods and services produced in the economy during a year—is
an overall measure of national output. By contrast, productivity is a measure of the
efficiency of production. It relates to the amount of goods and services a worker provides
in a given period.
6. Identify the degrees of competition existing in a private enterprise system. The four
basic degrees of competition in a private enterprise system are pure competition,
monopolistic competition, oligopoly, and monopoly.
7. Outline the historical development of the U.S. economy and its influences to
contemporary business. The development of the current U.S. economy has been
influenced by colonial society, the Industrial Revolution, the age of the entrepreneur, the
production era, and the post-World War II marketing concept. The current economic
climate.
8. Explain different types of economic systems. Many Americans fail to realize that a
large part of the world lives under economic systems other than capitalism, primarily
communism, socialism, and mixed economies. Communism, as proposed by Karl Marx,
is a “classless” economic system in which private property is eliminated and goods are
owned in common. A perfect communist state does not exist.
Socialism is an economic system in which the basic industries are owned and
operated by the government. Private ownership of some smaller businesses is permitted.
A mixed economy is one in which businesses and industries are publicly and privately
owned in various combinations.

Questions for Review and Discussion

1. What is the role of competition in the private enterprise system?

2. What role do entrepreneurs have in the private enterprise system?

3. Why is Adam Smith called the father of capitalism?

4. Explain the basic rights upon which the private enterprise system is based.

5. Identify and describe the inputs required by the private enterprise system. What
payments are made to each of these inputs? Discuss.

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