There are five different basics that make up free enterprise
Eminent Domain is the governments right to take property for public use. However, when they do, they must pay the person the value of the property.
Public Disclosure Laws are laws which Congress passed and require businesses to give consumers important information about a product or service.
Copyright vs. Patents: Copyright is a government gives an author the rights to publish and sell their work while a patent gives an inventor the right to produce and sell their product for 20 years. Both keep peoples work safe and is an incentive for people to work.
Free-Rider Problem: a free-rider is someone who is not willing to pay for a certain good or service however would benefit from the good had it been provided as a public good. An example of this is if you are working at a company that has a union. You are not a member of the Union however when the Union fights for higher wages you also get the benefit of having this higher wage.
- Profit Motive: this is what drives people and businesses to make decisions that improve their well-being.
- Open Opportunity: the idea that anyone can compete in the market.
- Legal Equality: the idea that everyone has the same legal rights.
- Private Property Rights: it gives you the right to control your own possessions and use them as you wish.
- Freedom to buy and sell: is made up of two things, buying and selling. The free contract allows people to enter into agreements based on their own opinions. Voluntary exchange is the idea that people can choose what they want, when, and how someone buys or sells something.
Eminent Domain is the governments right to take property for public use. However, when they do, they must pay the person the value of the property.
Public Disclosure Laws are laws which Congress passed and require businesses to give consumers important information about a product or service.
Copyright vs. Patents: Copyright is a government gives an author the rights to publish and sell their work while a patent gives an inventor the right to produce and sell their product for 20 years. Both keep peoples work safe and is an incentive for people to work.
Free-Rider Problem: a free-rider is someone who is not willing to pay for a certain good or service however would benefit from the good had it been provided as a public good. An example of this is if you are working at a company that has a union. You are not a member of the Union however when the Union fights for higher wages you also get the benefit of having this higher wage.
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The business cycle is made up of the following elements:
- Expansion: a steady rise in real GDP.
- Peak: when the real GDP stops rising.
- Contraction: a steady decline in real GDP.
- Trough: the economy has “bottomed out” and the real GDP is at the lowest point.