The free enterprise system, also known as capitalism, is the economic system we use in the United States and has many benefits. These benefits include optimal prices, incentives to work harder, improved living standards, and freewill. The market determines the cost of goods in a free-enterprise system. Prices are set by supply and demand, so if a good is scarce but has high demand, it will be an expensive item. On the other hand, if there is plenty of a good and demand is low, the price will be low. The free-enterprise system leads to optimal prices because of the laws of supply and demand. People also respond to incentives. In a free enterprise system, the harder you work, the more likely you are to see financial rewards. People are incentivized to work hard to reach financial success. In other economic systems such as communism, a worker is given a set wage regardless of how hard he/she works. Our capitalist system allows people to be rewarded for hard work. This hard work benefits our economy and leads to higher GDP, which leads to lower unemployment and higher average incomes. …show more content…
The standard of living improves when there is large economic growth. During economic growth, business owners get richer and employees are paid better. This increase in discretionary income leads to greater spending, which benefits the economy. So, due to the economic growth that results from a free enterprise system, the population’s standard of living, as a whole, improves. This is beneficial from an individual and national