Which of the following is NOT a characteristic of the American Free Enterprise System?

• A. Limited government intervention
• B. Consumer choice and competition
• C. Guaranteed profitability for all businesses
• D. Profit motive for business activities

Answer: (C)

The choice that is not a characteristic of the American Free Enterprise System is the guarantee of profitability for all businesses. In a free enterprise system, businesses operate in a competitive market where success is determined by various factors, including consumer demand, operational efficiency, and overall market conditions. There is no assurance that any business will make a profit, as profitability is influenced by the management of the business, economic fluctuations, competition, and consumer preferences.

The American Free Enterprise System promotes entrepreneurship and the risk-taking associated with starting and running a business, which inherently includes the possibility of failure and loss. Therefore, while some businesses may be highly successful, others may struggle to remain profitable, reflecting the dynamic nature of a market driven by free choice and competition. The absence of guarantees for profitability is a critical aspect that disciplines businesses to innovate and improve continuously, ultimately benefiting consumers through better products and services.