(a) Outline two feature each of… | Economics

Question 1 Report

(a) Outline two feature each of:
(i) capitalist economic system;
(ii) socialist economic system.

(b) Explain any four weaknesses of capitalist economic system.

Answer

Answer Details

(a) Features of the two systems

(i) Capitalist economic system:

Private individuals own the means of production (property and capital).
The profit motive and the price mechanism guide production, with freedom of enterprise and consumer choice.

(ii) Socialist economic system:

The state owns and controls the means of production on behalf of the people.
Central planning, rather than the free market, decides what, how and for whom to produce, aiming at equality.

(b) Four weaknesses of the capitalist system:

Wide inequality of income and wealth: the rich grow richer while the poor remain poor.
Exploitation: the profit motive can lead to underpayment of workers and overcharging of consumers.
Growth of monopolies: free competition can end in a few large firms dominating and abusing the market.
Economic instability and unemployment: the system is prone to booms and slumps that cause waste and joblessness.
Neglect of unprofitable but essential social services because private firms produce only what yields profit.

(a) Outline two feature each of: (i) capitalist economic system; (ii) socialist economic system. (b) Explain any four weaknesses of capitalist economic syst...