Bachelor of General Studies (BGS) Degree Practice Exam

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What does a free enterprise system primarily involve?

Government ownership of economic assets
Economic assets that are privately owned and exchanged in an open market
Regulated prices for goods and services
Socialized healthcare and education systems

The correct answer is: Economic assets that are privately owned and exchanged in an open market

A free enterprise system primarily involves economic assets that are privately owned and exchanged in an open market. This system is characterized by minimal government intervention, allowing individuals and businesses to operate freely and make their own economic decisions. Private ownership encourages innovation and competition, leading to a more efficient allocation of resources. In this framework, prices are typically determined by supply and demand rather than being set by the government, which fosters an environment where consumers and producers can freely interact in the marketplace. This principle of voluntary exchange is fundamental to the functioning of a free enterprise system, making option B the correct choice.