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Simple English definitions for legal terms
capitalism
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A quick definition of capitalism:
Capitalism is a way of organizing how we make and sell things. It means that people can own their own businesses and decide what to make and sell. They compete with other businesses to make the best products and sell them for the best price. This is different from communism, where the government owns everything and decides what to make and sell.
A more thorough explanation:
Definition: Capitalism is an economic system where private individuals or businesses own the resources and means of production, and the prices of goods and services are determined by supply and demand in a competitive market.
Example 1: A small business owner starts a bakery and hires employees to make and sell baked goods. The owner is responsible for making decisions about what products to sell, how much to charge, and how to market the business.
Example 2: A stockbroker invests in the stock market, buying and selling shares of companies to make a profit. The stockbroker is taking advantage of the competitive market to make money.
These examples illustrate how capitalism relies on private ownership and competition to drive economic growth and innovation. In a capitalist system, individuals are motivated by the potential for profit to create new businesses, products, and services that meet the needs and wants of consumers. The competition between businesses helps to keep prices low and quality high, as companies strive to attract customers and make a profit.