Chapter 1: Problem 8

The chapter defines private enterprise as a characteristic of market-oriented economies. What would public enterprise be? Hint: It is a characteristic of command economies.

Short Answer

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Public enterprise refers to the government ownership and management of organizations, resources, and businesses in an economy. It is a characteristic of command economies, which rely on government-controlled organizations and resources to dictate the production and distribution of goods and services, setting goals, quotas, and prices to achieve specific economic objectives instead of relying on market forces and competition, as seen in private enterprise in market-oriented economies.

Step by step solution

Define private enterprise

Private enterprise is characterized by the ownership and operation of businesses by individuals or groups rather than the government. This is a common feature in market-oriented economies, where people can start and manage their own businesses based on their ideas, skills, and resources.

Define command economies

Command economies are economic systems where the government controls and directs the production, distribution, and pricing of goods and services. In a command economy, the government owns many, or sometimes all, businesses and resources. This centralized control contrasts with market-oriented economies, where businesses and markets are driven by supply and demand, with minimal government intervention.

Define public enterprise

Public enterprise refers to the ownership and management of organizations, resources, and businesses by the government in an economy. This relates to the fact that, in command economies, the government controls and directs the means of production, distribution, and pricing of goods and services.

Explain public enterprise as a characteristic of command economies

Public enterprise is a characteristic of command economies because these types of economies rely on government-controlled organizations and resources to dictate the production and distribution of goods and services. The government sets goals, quotas, and prices, aiming to achieve specific economic objectives, rather than letting markets determine supply and demand. This contrasts with private enterprise in market-oriented economies, where businesses and resources are owned and managed by individuals and groups, guided by market forces and competition.

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