CA Foundation · Business Economics · Nature and Scope of Business Economics
Which of the following is a characteristic of a socialist economy as distinct from a capitalist economy?
In a socialist economy, the means of production are largely owned and controlled by the state, which plans production and distribution for social welfare. Profit-driven allocation, consumer sovereignty and price-led coordination are features of capitalism, not socialism.
- AResource allocation is mainly left to individual profit-seeking
- BMeans of production are largely owned and controlled by the stateCorrect
- CConsumers' sovereignty determines what is produced
- DPrices alone coordinate all economic activity
Explanation
In a socialist economy the state owns or controls major means of production and plans output through central authority, aiming at social welfare. The other options describe features of a capitalist market economy.
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