Freedom of Production

The freedom of production is an essential characteristic of the free enterprise system. The freedom to produce allows individuals to create value for themselves and others. This freedom creates six different choices for producers.

 

Choice of Type

Individuals are able to decide what type of good or service they are going to provide. This creates balance in economic output as there is no government entity that can effectively allocate production efforts.

 

Choice of Process

People choose what means they produce with. They choose to implement various production, marketing, and communications systems in their businesses. The result is that producers constantly search for new methods to provide their goods and services at a lower price, with higher quality, and more conveniently. In other words, innovation occurs. Limits on processes hamper the potential of the economy. Allowing processes, methods, and systems to be chosen is beneficial to society.

 

Choice of Time

Producers choose what time to perform their work. They can spend as much or as little time producing as they want. Harsh regulations on time keep businesses from operating as efficiently as possible. Choice of time improves convenience and efficiency.

grocery store location

Choice of Location

Individuals are able to choose the location of their production. A business may decide to set up a new location in a new city, state/ province, or even another country. Severe restrictions on location keep producers from having a place to be able to produce, thus diminishing economic output. Choice of location frees people to find the optimal place to do what they do best.

 

Choice of Quantity

The quantity of goods or services provide is also under the control of each person. An author might decide to write one book, or one hundred books. People generally try to produce as much as possible, with the limits being market forces that control revenue, expenses, and profits. External controls over quantity result in supply either falling short of consumer demand or in supply being unable to sell, and possibly being wasted, due to insufficient consumer demand. Choice of quantity allows people to increase output.

 

Choice of Quality

A company may decide to establish itself as a high quality, luxury provider of some product. Restrictions on quality result in a lack of diverse brands. This freedom creates many different options for consumers to choose from.


Freedom of production is crucial to market economies. Refer to “Free Enterprise System Definition and Characteristics” to learn about similar freedoms.