How does the American Free Enterprise System differ from a command economy?

How does the American Free Enterprise System differ from a command economy?

• A. Both systems emphasize government control
• B. Free enterprise relies on individual choice, unlike command economies
• C. Free enterprise eliminates consumer choice
• D. Both systems focus strictly on profit

Answer: (B)

The American Free Enterprise System is characterized by its foundation on individual choice and voluntary exchanges in the marketplace, which distinguish it from a command economy. In a free enterprise system, individuals have the freedom to make decisions about what goods and services to buy and sell, based on their own preferences and interests. This facilitates competition and innovation, driving economic growth and consumer satisfaction.

In contrast, a command economy is centrally planned and controlled by the government, which dictates production, pricing, and resource allocation without input from individuals. Therefore, the emphasis on individual choice in free enterprise is a fundamental difference between the two systems, allowing it to respond more dynamically to consumer needs and preferences.

The other options do not accurately reflect the nature of the American Free Enterprise System. While both a command economy and a free enterprise system may focus on profit, it is the mechanism of achieving that profit—through individual choice in free enterprise versus government control in a command economy—that creates the primary distinction.