In which type of economic system are the factors of production such as land, labour, capital and enterprise mainly owned by private individuals?

Introduction / Context:
Every economy must decide who owns and controls the basic factors of production, namely land, labour, capital and entrepreneurship. This question tests your understanding of how ownership differs across capitalist, socialist and mixed economic systems. Recognising these differences is essential for Indian economy and general economics questions in competitive exams.

Given Data / Assumptions:

• We consider three main economic systems: capitalist, socialist and mixed.
• Factors of production include land, labour, capital and enterprise.
• Ownership refers to legal control and the right to earn income from these resources.
• The question asks where ownership is primarily individual or private.

Concept / Approach:
In a capitalist economy, most of the productive resources are owned and controlled by private individuals or firms. The motive of profit plays a central role and markets allocate resources through price signals. In a socialist system, the state or community generally owns the means of production and central planning guides allocation. A mixed economy combines elements of both, with some sectors under state ownership and others under private enterprise. Therefore, when the question refers to factors being owned individually, it clearly points towards a capitalist economy.

Step-by-Step Solution:
1. Identify what the question is really asking: it focuses on individual ownership of production factors. 2. Recall that in a capitalist system, property rights are strong and private ownership is dominant. 3. In a socialist economy, major industries and resources are owned by the state or society as a whole. 4. In a mixed economy, there is a combination of private and public ownership, so ownership is not purely individual. 5. Therefore the correct system where factors are mainly owned individually is the capitalist economy.

Verification / Alternative check:
You can verify this by thinking about typical examples. In classic capitalist countries, private firms own factories, land and capital goods, and individuals can start businesses to earn profits. In contrast, in centrally planned socialist economies, the government owns major industries and controls production decisions. Mixed economies, including India, have both public sector enterprises and private sector firms, so they do not fit the description of primarily individual ownership in a pure sense.

Why Other Options Are Wrong:
Option B: Socialist economies emphasise social or state ownership, not individual ownership, of major production resources.
Option C: Mixed economies share ownership between state and private sector, so one cannot say that factors are owned individually as the dominant characteristic.
Option D: Capitalist and socialist systems are almost opposite with respect to ownership, so grouping them together is incorrect.
Option E: A traditional village based economy can involve communal ownership, customs and non market mechanisms, and is not defined simply by individual private ownership in the modern economic sense.

Common Pitfalls:
A common confusion is to think that because mixed economies allow private business, they must have the same ownership pattern as fully capitalist economies. Another mistake is to ignore that the question emphasises individual ownership of factors, not simply the presence of private firms. Always read carefully whether the exam is asking about dominant ownership, method of resource allocation or the role of planning versus markets.

Final Answer:
Capitalist economy