Which economic system features private ownership of production and profit as the main incentive for economic activity?

The correct choice highlights capitalism, an economic system where the means of production are privately owned and operated for profit. In capitalism, individuals or businesses make decisions regarding the production, distribution, and prices of goods and services based on market demand. This system is characterized by the profit motive, meaning that the primary aim of economic activity is to generate profit for owners and investors.

In a capitalist economy, competition plays a crucial role; businesses strive to improve efficiency and innovate to attract consumers, which can lead to an overall increase in economic prosperity. Additionally, the idea of supply and demand drives market dynamics, influencing everything from wages to prices. This framework encourages entrepreneurship and investment, as individuals seek personal gain and financial rewards for their contributions to the economic landscape.

The other listed systems differ significantly in their principles and structure. Socialism advocates for collective or governmental ownership of production, aiming to distribute wealth more evenly among the population, while communism seeks a classless society with communal ownership of all property. Feudalism, historically, is an economic and social system prevalent in medieval Europe based on land ownership and service relationships, rather than open market competition and profit incentives.