In the context of free enterprise, what is capitalism characterized by?

• A. Government ownership of resources
• B. Trade agreements with strict regulations
• C. Private ownership of production and market-driven decisions
• D. Non-profit management of businesses

Answer: (C)

Capitalism is characterized by the private ownership of production and market-driven decisions. In a capitalist system, individuals and businesses have the right to own and control property and resources as they see fit. This includes making decisions about what to produce, how much to produce, and at what price to sell goods and services. The market plays a crucial role in determining the allocation of resources based on supply and demand, allowing for competition that can foster innovation and efficiency.

The essence of capitalism lies in its emphasis on individual rights and economic freedom, which enable entrepreneurs to seek opportunities and drive economic growth. Market mechanisms facilitate a dynamic economy where prices communicate information about preferences and scarcity, enabling consumers and producers to make informed choices.

In contrast, options implying government ownership of resources or non-profit management inherently conflict with the principle of private ownership central to capitalism. Trade agreements with strict regulations, while they can exist within a capitalist framework, do not define its fundamental characteristics; rather, they serve as mechanisms that can either facilitate or complicate market interactions.