AP World History Practice Exam 2025 – The Comprehensive All-in-One Guide to Exam Success!

The concept of capitalism is primarily characterized by the existence of private ownership and free markets. This economic system allows individuals and businesses to own capital goods and operate enterprises for profit. In capitalism, the allocation of resources, production of goods, and determination of prices are largely driven by supply and demand within the market, which encourages competition and innovation.

Private ownership enables individuals to have control over their resources and the freedom to make economic decisions, which can lead to investment opportunities and economic growth. Free markets facilitate voluntary exchanges, where buyers and sellers interact without coercive interference.

The other ideas, such as collective ownership, absence of private property, or strict state control, do not align with the foundational principles of capitalism. Instead, they suggest alternative economic systems like socialism or command economies, which do not prioritize individual ownership or market dynamics in the same way that capitalism does.