Which of the following are true?
(A) In a capitalist economy, low cost housing for the poor will be produced because it is much needed.
(B) In a capitalist economy, the government takes the responsibility of providing necessary goods and services to people.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Both (A) and (B) are false
In capitalism, the market produces what people can pay for. The government does not take charge of supplying needs.
(A) In a capitalist economy, low cost housing for the poor will be produced because it is much needed. — Incorrect. The poor lack the purchasing power to back their need, so it does not count as demand. Such housing will not be produced.
(B) In a capitalist economy, the government takes the responsibility of providing necessary goods and services to people. — Incorrect. The government provides essential goods in a mixed economy. In capitalism, market forces decide.
NCERT (2026-27): “Box 2.1: Types of Economic Systems … In a capitalist society the goods produced are distributed among people not on the basis of what people need but on the basis of Purchasing Power—the ability to buy goods and services. That is, one has to have the money in the pocket to buy it. Low cost housing for the poor is much needed but will not count as demand in the market sense because the poor do not have the purchasing power to back the demand. As a result this commodity will not be produced and supplied as per market forces. …” “… In a mixed economy, the market will provide whatever goods and services it can produce well, and the government will provide essential goods and services which the market fails to do.” |