at to produce and how to produce it are left to private decision-makers. A person who takes the initiative and risk of starting or expanding a business is called an entrepreneur. Due to several people being free to enter a new business at any time, a number of companies usually offer the same product or service. Competition among multiple sellers helps to hold down prices and keep quality high, since customers are likely to buy from the company with the best product and lowest price. According to laws of supply and demand when supplies become more plentiful, prices tend to drop. Being that a firm is the only source of a product or service, its known as a monopoly. Monopolies can be very powerful due to the fact that they can charge as much as they want without any competition. Consumers can choose from a variety of products and services, entrepreneurs can switch from one business to another, and workers can quit their jobs and take new ones all has to do with freedom of choice.Adam Smith claimed in a classic expression that when all individuals are free to pursue their own private interests, an invisible hand works to promote the general welfare. On the other hand, the Laissez-Faire Theory confines that governmental activity should be confined to: (1) foreign relations and national defense, (2) the maintenance of police and courts to protect private property and health, safety, and morals of the people, (3) those few other functions that cannot be performed by private enterprise at a profit. Many aspects of American economic life are regulated by government at every level, like the prohibition of trust, and protecting the environment. While American economic life is also promoted by government, as well. For example, the government construct public roads and highways, and provides such services as the postal system, the census, and weather reports.Taking risks and making investments are an essential part of the capitalist syst...
