Mention the characteristics of capitalist economy.

In a capitalist economy, all the factors of production are owned and controlled by private people and they have complete freedom on what to produce and what to consume and the government does not interfere in it. It is also called as an independent economy, market economy or free economy, as market forces determine and decide the production.

Main features of the capitalist economy are mentioned below

1. Right to private property: in this type of economy factor of production like land, machinery, mines etc are owned by private people and they use them to maximise their benefits,

2. Freedom of choice for consumers: Produces the goods as per consumer needs and it is called consumer sovereignty. In this type of economy, the consumer is free to choose, and he is the king of the market as he has the greatest position.

3. Freedom of enterprise: In capitalist people have complete control over and they can choose any activity or enterprise, industry or technology to produce goods. As there is no intervention of government it is also called an independent economy.

4. Competition: as everyone has the freedom to choose their economic activity and consumer is the king of market, there is competition in the market to meet the needs of consumer and everyone tries to sell their goods and services in the market to get the maximum benefits using different strategies like advertisement etc to get maximum consumer base. These competitions increase the efficiency of the market.

5. The objective of profit or self-interest: As there is complete freedom on the selection of economic activity, this decision is taken mainly on the basis of profit making, means people select the activity where they can maximise their profit and benefits, the consumer also uses goods and services for the personal benefits.

6. Class struggle: in this economy society is divided into rich and poor classes. Rich class is a capitalist class who uses resources to maximise their profit, whereas poor class is labour. To increases profit capitalist class exploit labour and to prevent exploitation class struggle raises, to prevent class struggle labour establish labour union.

7. Income inequalities: people who have resources use those resources to continue to maximise their profit which increases the class gap, rich keeps on getting richer and poor remains poor.