ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Capitalism is often thought of as an economic system in which private actors own and control property in accord with their interests, and demand and supply freely set prices in markets in a way that can serve the best interests of society. The essential feature of capitalism is the motive to make a profit.

Detailed explanation-2: -A country’s market economy supports increased innovation. Firms and individuals are encouraged to innovate to gain a competitive edge. With money as a main motivating factor, companies look to create new products and technologies to generate more revenue and higher incomes.

Detailed explanation-3: -Market based economies utilize the power of profit as an incentive. Profit motivates entrepreneurs to accept the risk of acquiring and organizing resources to seek market opportunities. The entrepreneur takes whatever profit or loss results from an enterprise.

Detailed explanation-4: -In capitalist economies, people have strong incentives to work hard, increase efficiency, and produce superior products. By rewarding ingenuity and innovation, the market maximizes economic growth and individual prosperity while providing a variety of goods and services for consumers.

Detailed explanation-5: -It has been argued that the economic freedom associated with a market economy creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy.