What defines a free enterprise economy?

A free enterprise economy is defined primarily by its characteristics of market freedom and limited government intervention. In such an economy, individuals and businesses have the liberty to make their own economic choices, such as what to produce, how to produce it, and at what prices to sell goods and services. This system fosters competition, innovation, and efficiency, as market dynamics naturally regulate supply and demand without excessive governmental control.

Limited government intervention means that while there may be regulations in place to ensure fair practices and protect property rights, the government's role is not to dictate prices or manage production. This encourages entrepreneurship and allows for greater flexibility and responsiveness to consumer needs, which are essential features of a truly free market.

In contrast, other choices depict systems where state ownership, centralized control, or public sector dominance restrict individual freedoms, choice, and competition, which are fundamental principles of a free enterprise economy.