Which of the following statements accurately describe characteristics of capitalism and socialism? Select all that apply.

Capitalism is an economic system where private individuals own and control businesses and property, allowing them to make profits based on supply and demand. In contrast, socialism focuses on collective or government ownership of resources and aims to distribute wealth more equally among people. For example, in a capitalist system, a person can start their own bakery and keep all the profits, while in a socialist system, the bakery might be owned by the community, and profits could be shared. Capitalism encourages competition, which can lead to innovation, but it can also create wealth gaps, whereas socialism seeks to reduce those gaps but may limit individual incentives to work hard. Understanding these differences helps us see how each system impacts people's lives and the economy.