The Role of a Consumer in a Free Enterprise

by Nicole Long; Updated July 27, 2017

With a focus on limiting the role of government in the economic decisions made by individuals and corporations, the free-enterprise system allows competition and innovation to drive the economy. As part of the free-enterprise system, consumers have the ability to influence several economic factors, including pricing and production.

Function

In exchange for labor, consumers receive a wage to spend and invest on resources as they see fit. This wage allows consumers to participate in the free-enterprise economic system through the purchase of goods and services.

Significance

The choices made by a consumer in a free-enterprise system reflect individual needs and desires. These choices, including what to purchase and the price they are willing to pay for goods and services, influence the direction of the economy. Collectively, these decisions affect the total demand for products and services, pricing decisions by companies and future product-development decisions.

Considerations

Consumers adjust buying habits in reaction to a myriad of economic trends and issues. Unemployment, recessionary trends and inflation represent just a few of the economic trends and issues that can alter the purchasing power of a consumer.

About the Author

Nicole Long is a freelance writer based in Cincinnati, Ohio. With experience in management and customer service, business is a primary focus of her writing. Long also has education and experience in the fields of sports medicine, first aid and coaching. She earned her Bachelor of Arts degree in economics from the University of Cincinnati.