Miscellaneous Questions

Under the free enterprise, capitalist economy of the United States, land and capital goods used in the production of economic output are owned primarily by private entities as opposed to governmental entities (3:27). The private ownership of these factors of production places in the hands of the private sector decisions related to what goods to produce, how much of a good to produce, and how other goods and services will be allocated to various production activities. The economic output produced by the owners of the land and capital goods employed in the production process also becomes the private property of these private entities (3:28). Thus, subsequent to a requirement to pay for any factors of production used but not owned by these private entities (labor as an example), the private entity owners of the economic output are free (within limits imposed by restraint of trade laws and national security considerations) to dispose of the economic output as they wish. These characteristics of economic production allow the private entity owners of the economic output to earn a profit on the output. This profit serves as an incentive to reinvest some portion of that profit for the production of additional economic output. As other private entities also are free to behave in a similar manner, competition develops in profitable areas of economic output. Competition, in turn, spurs producers to seek p