ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The origin of capitalism can be traced back to 18th century England that was undergoing the industrial revolution at that time. As there is no government intervention in this type of economy, it is also known as a free market economy.

Detailed explanation-2: -The production of goods and services under capitalism is based on supply and demand in the general market-known as a market economy-rather than through central planning-known as a planned economy or command economy. The purest form of capitalism is free market or laissez-faire capitalism.

Detailed explanation-3: -Capitalism is an economic system that is characterized by private property, freedom of economic exchange, competitive markets and limited government intervention. While the government doesn’t set prices in a free market, the market does through the law of supply and demand.

Detailed explanation-4: -One of the most important characteristics of a market economy, also called a free enterprise economy, is the role of a limited government. Most economic decisions are made by buyers and sellers, not the government. A competitive market economy promotes the efficient use of its resources.