Question

which term describes an economic system that permits freedom of choice and encourages private possession of the resources necessary to produce and sell the products and the services people use?
a. socialism
b. communism
c. capitalism
d. a planned economy
e. a mixed economy

Explanation:

To solve this, we analyze each option:

• Option A (Socialism): Focuses on public/state ownership, not private possession. Eliminate.
• Option B (Communism): Aims for common ownership, no private resource possession. Eliminate.
• Option C (Capitalism): Defined by private ownership of resources, freedom of choice in production/consumption, and private enterprise. This matches the description.
• Option D (Planned Economy): Central planning by the state, limited private ownership. Eliminate.
• Option E (Mixed Economy): Combines public and private, but the key here is "encourages private possession" which is core to capitalism, not just a mix. Eliminate.

Answer:

C. Capitalism