Which of the following is not a characteristic of a capitalist economy?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → There is public ownership of means of production.
Note: The given answer is as per the official NTA Answer Key. However, the question can have more than one correct answer, i.e. both Option (2) and Option (4), as explained below.
In a capitalist economy, private entrepreneurs (business owners) hire land, labour and capital, make goods and sell them in the market. What is left after paying rent, interest and wages is their profit. Capitalism has three characteristics: private ownership of the means of production, production for selling in the market, and sale and purchase of labour services for a wage.
Option (1) There is private ownership of means of production. — True. This is the first characteristic. Factories, machines and land belong to private persons.
Option (2) There is public ownership of means of production. — False. Ownership by the state is the mark of a socialist economy. It is the opposite of private ownership, the first characteristic of capitalism.
Option (3) There is sale and purchase of labour services at a price which is called the wage rate. — True. This is the third characteristic. Workers sell their work for a wage (wage labour).
Option (4) Production takes place for the welfare of society. — False. Should also be correct, though not the answer given by NTA. In capitalism, goods are made to be sold in the market for profit. The option changes this purpose to the welfare of society.
Advice for the exam: When more than one option is correct, mark the one that answers the question most completely as per the NCERT book, here Option (2), which is the direct opposite of private ownership, a listed characteristic. If NTA’s provisional answer key marks a different option, challenge it during the answer-key challenge window, giving proper reasoning. NTA does revise its key when a challenge is well justified, so a sound challenge can raise your marks.
NCERT (2026-27): “…After producing output with the help of these three factors of production, namely capital, land and labour, the entrepreneur sells the product in the market.… …In short, a capitalist economy can be defined as an economy in which most of the economic activities have the following characteristics (a) there is private ownership of means of production (b) production takes place for selling the output in the market (c) there is sale and purchase of labour services at a price which is called the wage rate (the labour which is sold and purchased against wages is referred to as wage labour).” |