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The American economic system is organized around a basically private-enterprise, market-oriented economy in which consumers largely determine what shall be produced by spending their money in the marketplace for those goods and services that they want most. Private businessmen, striving to make profits, produce these goods and services in competition with other businessmen; and the profit motive, operating under competitive pressures, largely determines how these goods and services are produced. Thus, in the American economic system it is the demand of individual consumers, coupled with the desire of businessmen to maximize profits and the desire of individuals to maximize their incomes, that together determine what shall be produced and how resources are used to produce it.
An important factor in a market-oriented economy is the mechanism by which consumer demands can be expressed and responded to by producers. In the American economy, this mechanism is provided by a price system, a process in which prices rise and fall in response to relative demands of consumers and supplies offered by seller-producers. If the product is in short supply relative to the demand, the price will be bid up and some consumers will be eliminated from the market. If, on the other hand, producing more of a commodity results in reducing its cost, this will tend to increase the supply offered by seller-producers, which in turn will lower the price and permit more consumers to buy the product. Thus, price is the regulating mechanism in the America economic system.
The important factor in a private-enterprise economy is that individual are allowed to own productive resources (private property), and they are permitted to hire labor, gain control over natural resources, and produce goods and services for sale at a profit. In the American economy, the concept of private property embraces not only the ownership of productive resources but also certain rights, including the right to determine the price of a product or to make a free contract with another private individual.
1. In Para. 1, “ the desire of individuals to maximize their incomes” means ___.
A. Americans never feel satisfied with their incomes.
B. Americans tend to overstate the amount of their incomes.
C. Americans want to have their incomes increased.
D. Americans want to increase the purchasing power of their incomes.
2. The first two sentences in the second paragraph clarity the idea to us that ___.
A. producers can satisfy the consumers by mechanized production.
B. consumers can express their demands through producers.
C. producers decide the prices of products.
D. supply and demand regulate prices.
3. The word “embraces” in Para. 3 probably parallels ___.
A. enfold
B. hug
C. comprehend
D. support
4. According to the passage, a private-enterprise economy is characterized by ___.
A. private property and rights concerned.
B. manpower and natural resources control.
C. ownership of productive resources
D. free contracts and prices.
5. The passage is mainly talking about ___.
A. how American goods are produced.
B. how American consumers buy their goods.
C. how American economic system works.
D. how American businessman make their profits.
