Question

Outline the major merits of capitalism.

Answer 1

Merits of Capitalism:

1. Automatic Working:
   Without any government intervention, the economy works automatically.
2. Efficient Use of Resources:
   All resources are put into optimum use.
3. Incentives for Hard work:
   Hard work is encouraged and entrepreneurs get more profit for more efficiency.
4. Economic Progress:
   Production and productivity levels are very high in capitalistic economies.
5. Consumers Sovereignty:
   All production activities are aimed at satisfying the consumers.
6. Higher Rates of Capital Formation:
   An increase in saving and investment leads to higher rates of capital formation.
7. Development of New Technology:
   As profit is aimed at, producers invest in new technology and produce quality goods.