What is the role of government in a free enterprise system?

• A. To control market prices and production levels
• B. To promote public ownership of all resources
• C. To protect property rights, enforce contracts, and provide a legal framework
• D. To regulate all business practices and eliminate competition

Answer: (C)

In a free enterprise system, the government's role is primarily to create and maintain a stable environment where individual and business activities can flourish. This involves protecting property rights, enforcing contracts, and providing a legal framework within which businesses can operate.

By safeguarding property rights, the government ensures that individuals and companies can own assets and investments without fear of arbitrary seizure or theft. Enforcing contracts is essential for business transactions, as it assures parties involved that agreements will be upheld, fostering trust and encouraging trade. A robust legal framework supports a competitive market, allowing businesses to innovate and grow, which ultimately benefits consumers through better products and services.

The other choices imply roles that would limit or control the market unduly. For example, controlling market prices and production levels or promoting public ownership of all resources would undermine the autonomous nature of a free enterprise system. Similarly, blanket regulation of all business practices and the elimination of competition would stifle innovation and reduce choices available to consumers. Therefore, the correct answer reflects the ideal government role that supports rather than dictates the workings of a free market.