Question

Fred Sanchez owns and operates his own small automobile repair shop. However, the prices he can charge are fixed, and he rents his land and building from the government. Most of his friends work for industries owned by the government. Fred's country is most likely a(n) ____ economy.

Answer 1

Answer:

A socialist economy.

Explanation:

A socialist economic system is best defined as a type of economic system where citizens of a country own the factors of production. Factors of production here refer to elements such as entrepreneurship, labor, land, and capital. Socialist economics can be differentiated into many types, both in practice and theory, however the two most prominent ones that exist in both forms are market socialism and planned economies.

In market socialist economies, unlike in planned economies, the question of what to produce is answered by the firms involved in the market – it is not decided by a government entity. However, both type of economies deem that profits generated through transactions occurring in the market should be redistributed to all citizens, either for public financing, increasing employee remuneration, or dividend payments.