Final Answer:
1. Problems of a pure free market economy include:
- Abuse by powerful businesses (e.g., price-fixing, monopolies) without oversight.
- Lack of consumer protection (e.g., unsafe products, fraud).
- Inequality—wealth and resources may concentrate in few hands.
- Public goods (like roads, clean air, national defense) may be underprovided since private firms won’t profit from them.
- Externalities (e.g., pollution) go unaddressed because costs aren’t borne by the polluter.
2. The US economy is “mixed” because the government plays a role in regulating, taxing, and providing services—but most businesses are privately owned and operate competitively. Examples of regulatory agencies/laws:
- Federal Trade Commission (FTC) — stops unfair business practices.
- Food and Drug Administration (FDA) — ensures food and drugs are safe.
- Environmental Protection Agency (EPA) — enforces clean air/water laws.
- Sherman Antitrust Act — prevents monopolies.
- Fair Labor Standards Act — sets minimum wage and overtime rules.
3. Opinion-based, but a balanced answer could be:
The US economy is somewhat regulated, but regulation isn’t always consistent or strong enough. For example, Amazon’s labor practices raise concerns about worker pay and hours—this suggests more regulation (like stronger overtime enforcement or minimum wage laws tied to cost of living) could help protect workers. However, too much regulation might hurt small businesses or innovation, so improvements should be thoughtful—not just “more” or “less,” but *better-targeted* rules.
Parent Tip: Review the logic above to help your child master the concept of government and the economy worksheet.
