Question

Differentiate between capitalist economy and socialist economy.

Answer 1

CAPITALIST ECONOMY:-

A capitalist economy , also called market economy or capitalism, is defined as the one in which means of production are owned by the individuals, and the individuals are free to take their economic decisions ,as guided by the principle of profit maximization.

SOCIALIST ECONOMY:-

A Socialist economy is the one in which there is a social ownership of the means of production, and economic decisions are taken by some Central authority of the government with a view to maximize social welfare. It is assumed that the government knows what is the best for the country and so individual desires are not given priorities.