(a) What is an economic system?
(b) Outline any four features of a capitalist economy.
(a) An economic system IS an arrangement specifying how production and consumption are controlled in a society
(b)The features of a capitalist economy are: (i)Most of the resources are owned by private Individuals or groups of individuals.
(ii) A small proportion of resources is owned by Government for the purpose of maintaining government functions.
(iii) Consumers are free to decide what to buy and what not to buy as determined by their ability to pay.
(iv) Producers are free to decide which goods and services to produce, how to produce, where to produce as determined by their ability to acquire the factors of production.
(v) The overriding aim of production IS to maximize profits.
(vi) The aim of consumers is to maximize utility.
(vii) The consumer is sovereign
(viii) Prices are determined by the forces of demand and supply through competition.
(ix) It is characterized by income Inequality
(x) Instability in employment.
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