UGC NET
   Top Resources
profile-img
Eduncle posted an MCQ
October 13, 2019 • 20:39 pm 0 points
  • UGC NET
  • Commerce

Which one of the following is not the characteristic of capitalism ?

Choose Your Answer:
0 Attempts Submit Now
  • 0 Likes
  • 1 Comments
  • 0 Shares
  • comment-profile-img>
    Eduncle Best Answer

    10 Important Characteristics of Capitalism
    The following are the important characteristics of capitalism :
    1. Free Enterprise Economy : Capitalism is also called as free enterprise economy. This is because under capitalist system, individuals and private firms have the right to own and use property. They have the right to earn, save and spend incomes also. They are allowed to obtain resources, to organize production and to sell the products in any manner they like and to any one. Here, there will not be Government or any other restrictions on the freedom and ability of the private individuals to carry out any business. Hence there is full freedom of enterprise regarding choice of work, occupation and enterprise.
    2. Private Ownership : Under capitalist economy, the factors of production like labor, land, capital and organization are privately owned. Private property is protected, controlled and enforced by law. Individuals have the right to own property and also free to use it as they like.
    3. Freedom to Choose Occupation : In a capitalist economy, a person is free to select any occupation. This freedom of choice enables the individuals to enter the field in which they have knowledge and purchase the property, which yields maximum profit. This type of freedom enables the businessmen to earn profit from their business. More resources flow into those areas where yield is more.
    4. Market Mechanism : The market mechanism is the most important characteristic feature of capitalist economy. It is also called as price mechanism. Under capitalist economy, profit, which is related with market mechanism, guides the allocation of resources. Under this system the whole economic system moves in and around the market mechanism. This system suffers from lack of proper planning for distribution of economic resources and co-ordination between production and consumption. Price mechanism determines the level of consumption, production and distribution. It is acting as the regulating mechanism in capitalist society.
    5. Consumers' Sovereignty : Under capitalist economy consumers have complete freedom to choose what to purchase. Consumer is the king of the market under capitalism. Manufacturers consider consumers' demand, taste, preference etc. while producing goods.
    6. Freedom to Save and Spend : Under capitalism, it is also the feature that consumer has liberty to dispose of his personal income in any way he likes. At a particular time, he may spend even more than what he earns. He may save his income and can give loan to anyone.
    7. Competition Among Sellers : Competition among sellers is another feature of capitalist system. The competition among producers makes them to make best use of factors of production and produce goods at minimum cost. They try to excel others. Therefore, in a free market economy competition is considered as an essential feature to protect the consumers, and to maintain a flexible price system.
    8. Freedom to Enter into Contracts : Under capitalist economy, people are free to enter into contracts. Every person is free to sell his goods or render services to any one he likes.
    9. Inheritance : The right to give or acquire property in inheritance is allowed in capitalism.
    10. No Central Plan : Under the capitalist economy there is no central plan to guide and control the activities of various business concerns. It is the market forces, which influence the resource allocation, investment decisions etc. and not the Government under the capitalist economy.

whatsapp-btn

Do You Want Better RANK in Your Exam?

Start Your Preparations with Eduncle’s FREE Study Material

  • Updated Syllabus, Paper Pattern & Full Exam Details
  • Sample Theory of Most Important Topic
  • Model Test Paper with Detailed Solutions
  • Last 5 Years Question Papers & Answers

Sign Up to Download FREE Study Material Worth Rs. 500/-