alleryStart learning →How is socialism defined as an economic system?
ABasic industries are owned by the state or closely controlled by it
BEvery enterprise in the country is owned by the central government
CAll factors of production are owned by private individuals and firms
DPrices are set by supply and demand with no government role at all
Answer & Solution
Correct answer: A. Basic industries are owned by the state or closely controlled by it
1. Under socialism the basic industries are owned by the government.
2. Alternatively they stay with the private sector but under strong government control.
3. Ownership of every enterprise by the state is communism, which goes further.
4. Fully private ownership of the factors of production is capitalism.
5. Prices set purely by supply and demand with no government role describes pure capitalism, not socialism.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 1 "Understanding Economic Systems and Business", section 1.3 How Business and Economics Work_
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