Question

What is the main characteristic of a capitalist or free market economy?

• A. Individuals are the owners of factors of production
• B. Profit is the main motive of carrying out various activities
• C. Consumer freedom
• D. All of the above

Answer 1

Answer: (D)

All of the above

The main features of a capitalist economy are as follows:

• Factors of production are owned by the individuals.
  
• Every individual has the freedom to start a business of his own choice.
  
• All economic activities are guided by the motive of profit.
  
• Individuals are the owners and acquire property and pass it on to next heir after death.
  
• The government has little role to play in the functioning of the economy.
  
• Prices of goods and services are determined by the market forces of demand and supply.