Question

which scenario best represents free enterprise ideals in action?

a. the federal government collects income tax money and uses it to maintain a military force.

b. the state government mandates that all public schools must buy books and supplies from one provider.

c. the only dog groomer in a small town makes a profit even though her prices are high and her work is poor quality.

d. the maker of a child-safety device produces the device at the lowest possible cost and charges the highest possible price.

Explanation:

• Option A: Government using tax for military is about public spending, not free enterprise (free enterprise focuses on private business activity).
• Option B: Government mandating a single supplier for schools is government intervention, restricting competition, opposite of free enterprise.
• Option C: A monopoly (only dog groomer) with poor quality and high prices is not ideal free enterprise as free enterprise thrives on competition which would drive out such a business in an ideal free - market.
• Option D: In free enterprise, businesses aim to maximize profit by minimizing costs and maximizing revenue (charging the highest price the market will bear), which is what the child - safety device maker is doing.

Answer:

D. The maker of a child - safety device produces the device at the lowest possible cost and charges the highest possible price.