In a capitalist economic system, what is the primary role of government?

• A. To set prices for all goods and services
• B. To enforce property rights and provide a legal framework for markets
• C. To eliminate competition among firms
• D. To own and operate most businesses

Answer: (B)

Verified step by step guidance

1. Understand the nature of a capitalist economic system, which is characterized by private ownership of resources and market-driven allocation of goods and services.
2. Recognize that in capitalism, the government does not typically set prices or own most businesses; instead, prices are determined by supply and demand in the market.
3. Identify the government's primary role as creating and enforcing the rules that allow markets to function efficiently, such as protecting property rights and enforcing contracts.
4. Note that eliminating competition contradicts the principles of capitalism, where competition drives innovation and efficiency.
5. Conclude that the government's main function is to provide a legal framework that supports market transactions and protects individual and business rights.