UK A-Levels Politics Practice Exam

What is the main feature of capitalism?

1. A system where trade is controlled collectively

2. An economic model emphasizing state ownership

3. A system managed by private owners for profit

4. A philosophy promoting equal wealth distribution

The correct answer is: A system managed by private owners for profit

Capitalism is characterized primarily by a system managed by private owners for profit. In a capitalist economy, individuals or companies own and control the means of production and distribution of goods and services. This ownership allows them to make decisions based on market forces, including supply and demand, with the goal of generating profit. Under capitalism, the profit motive drives innovation and efficiency, as businesses compete to attract customers and maximize their returns. This competitive environment fosters economic growth and can lead to a diverse range of products and services available to consumers. The other options represent alternate economic systems. Collectively controlled trade suggests a system like socialism, where the community or state manages resources. State ownership emphasizes a command economy, which contradicts the principle of capitalism that highlights private ownership. Lastly, promoting equal wealth distribution aligns more with socialist or communist ideologies, which prioritize equity over the profit motive inherent in capitalism.