Which statement about freedom of enterprise and freedom of choice is true?

Which statement about freedom of enterprise and freedom of choice is true?

How do freedom of enterprise and freedom of choice apply to the American economy? Freedom of enterprise: Individuals are free to own/control the factors of production. Freedom of choice is the other side of freedom of enterprise buyers-not sellers-make the decisions about what should be produced.

Who benefits from government intervention?

Governments can intervene to provide a basic security net – unemployment benefit, minimum income for those who are sick and disabled. This increases net economic welfare and enables individuals to escape the worst poverty. This government intervention can also prevent social unrest from extremes of inequality.

What do u mean by market failure?

Market failure is the economic situation defined by an inefficient distribution of goods and services in the free market. In market failure, the individual incentives for rational behavior do not lead to rational outcomes for the group.

Why is monopoly a market failure?

Market failure in a monopoly can occur because not enough of the good is made available and/or the price of the good is too high. Without the presence of market competitors it can be challenging for a monopoly to self-regulate and remain competitive over time.

What factors can turn a company into a monopoly?

How to Create Monopoly in the Market

• Intellectual Property Protection.
• Strong Distributor Network.
• Exclusive Rights.
• Economies of Scale.
• Proprietary Technology.
• High Capital Investment.
• Brand Equity.

How does monopoly affect the economy?

Monopolies can be criticised because of their potential negative effects on the consumer, including: Restricting output onto the market. Charging a higher price than in a more competitive market. Reducing consumer surplus and economic welfare.

What is deadweight loss example?

A deadweight loss is a loss in economic efficiency as a result of disequilibrium of supply and demand. As the apartments get sold or converted, the stock, or supply, of rental apartments declines – meaning there is a deadweight loss.

Why is deadweight loss bad?

A deadweight loss occurs when supply and demand are not in equilibrium, which leads to market inefficiency. While certain members of society may benefit from the imbalance, others will be negatively impacted by a shift from equilibrium.

What does deadweight loss result in tax?

Deadweight loss of taxation measures the overall economic loss caused by a new tax on a product or service. It analyses the decrease in production and the decline in demand caused by the imposition of a tax. It is a lost opportunity cost.

What is the deadweight loss of a tariff?

The reduction in consumption associated with the tariff creates a deadweight loss. Consumers who should be buying pomelos, if they could get them at the true price, but are not buying them at the high price created by the tariff. This area is a deadweight loss. It’s lost value from a reduction in consumption.

What happens to deadweight loss when tax is increased?

Mathematically, if a tax rate is doubled, its deadweight loss will quadruple—meaning the excess burden will increase at a faster rate than revenue increases. It is important to not only consider the change in revenue a tax increase would lead to, but also the increased deadweight loss the tax increase would cause.