Guided Reading Activity
The American Free Enterprise System
Lesson 1 American Free Enterprise Capitalism
Review Questions
Directions: Read each main idea and complete the statements below. Refer to your textbook as you write the
answers
A. Characteristics of Free Enterprise Capitalism
Main Idea: The five characteristics of free enterprise capitalism are economic freedom, voluntary exchange,
private property, the profit motive, and competition.
1. An economy based on free enterprise has both ______ and ______
2. Economic freedom grants the ability to ______ the things you want and ______
where and for whom you want. Businesses can ______ the workers they want and are free to
______ success or failure.
3. In a ______ exchange, buyers acquire items they believe are worth ______ than
the money charged, while ______ believe the item sold is worth ______ than the
cash paid. Both parties believe they ______ from the transaction.
4. In a capitalistic system, people can do whatever they choose to their property due to ______
Additionally, they have the opportunity to ______
and ______ based on the value of their property.
5. The ______ drives producers to improve their ______ well-
being. Because of this, the lure of ______ guarantees a constant supply of goods and
services from all kind of producers.
6. Capitalism helps ensure ______ resources are used efficiently by promoting
______ among producers.
