Question

Capitalist economy is characterized by __________.

• A. profit motive
• B. competition among sellers & buyers
• C. inequalities of income
• D. all of the above

Answer 1

The correct option is D all of the above

Characteristics ofcapitalism include private property, capital accumulation, wage labour, voluntary exchange, a price system and competitive markets. People often use the terms free enterprise, free market, or capitalism to describe the economic system. A free enterprise economy has five important characteristics. They are economic freedom, voluntary (willing) exchange, private property rights, the profit motive, and competition.

In it, the government plays a secondary role. People and companies make most of the decisions and own most of the property. The means of production are largely or entirely privately owned by individuals or companies and operated for profit.

Capitalism creates wealth, but by not paying a living wage for all work, it creates poverty as well and that's where the inequality becomes so highly pronounced. The rich get richer and the poor get poorer because, in order to buy what they need, the poor have to borrow money.

Capitalism creates competition. Sellers compete in offering their goods to the potential buying public, and buyers' existing or possible demands attract sellers to produce and market what they decide to manufacture.

Hence, D is the correct option.