Future Business Leaders of America (FBLA) Agribusiness Practice Test

What is the definition of capitalism?

1. A system where the government controls all resources

2. An economic system where individuals own resources and can use them freely

3. A method of distributing goods through state-owned enterprises

4. A practice of cooperative business ownership

The correct answer is: An economic system where individuals own resources and can use them freely

Capitalism is fundamentally characterized by the ownership of resources by individuals rather than the state. In this economic system, individuals or businesses have the freedom to own, use, and trade resources, which allows them to make decisions based on their personal or business interests. This encourages innovation, competition, and economic growth, as individuals seek to maximize their profits by providing goods and services that meet consumer demand. The emphasis on private ownership is central to capitalism, making it distinct from other systems where the government plays a more substantial role in controlling assets or production. The ability to make independent choices regarding investments and economic activities is what drives the dynamic nature of capitalist economies, fostering a marketplace where supply and demand can dictate prices and availability of goods. Understanding this definition is crucial in distinguishing capitalism from systems that involve government ownership or cooperative models, where ownership and decision-making are shared or controlled by the state or collectives.