What are the important features of a capitalist economy - Economics - Introduction

Question

What are the important features of a capitalist economy?

Bhawna Madaan · Accepted Answer

Capitalist economy is an economic system where the means of
production are privately owned These means of production are driven
by the motive of profit making This economic structure is also
known as free market economy or laissez faire
Following are the features of a capitalist economy:
1 Role of the government
The government provides the basic framework for the smooth
functioning of an economy It provides the basic framework and is
responsible for maintenance of law and order, justice, growth and
stability, defence, etc
2 Profit motive
The economic agents are driven by the prime motive of profit
maximization
3 Central problems
The central problems of an economy are solved by the market
forces of demand and supply, i e , the law of demand and supply
operates here The producers will supply only those goods and
services that are demanded by the economy
4 Role of private sector
The role of private individuals is more dominant The main role
of undertaking production and organising factors of production are
played by the private individuals and capitalists
5 Laissez-faire
This economy is also called `laissez faire’ It has
minimum interference or restriction from the government