Name: Nur Farahanim Binti Mohd Tahir
Lecturer’s Name: Puan Juliana Noor Binti Kamaruddin
Date of submition: 30th November 2011
An economic system is a system that involves the production, distribution and consumption of goods and services between the entities in a particular society. The economic system is composed of people and institutions, including their relationships to productive resources, such as through the convention of property. In a given economy, it is the systemic means by which problems of economics are addressed, such as the economic problem of scarcity through allocation of finite productive resources.
Examples of contemporary economic systems include capitalist systems, socialist systems, mixed economy systems and economic systems of Islam.
A capitalist economy is an economic system in which the production and distribution of commodities take place through the mechanism of free markets. Hence, it is also called as market economy or free trade economy.
In a market capitalist system, capital and land are private property. Enterprises may be formed by individuals who can get access to land and equipment, either because they own it or can rent or borrow to get it, and who can hire labour or employ themselves. Enterprises organize and direct production, and they are operated for the private benefit of the person who organizes the enterprise. Private benefit is interpreted as profit, so we say that the enterprises maximize profits.
In a capitalist economy, production is limited by existing resources, technology and profit and it makes sense that an economic system based on profit would produce any given product or service. A Capitalist economic system is one characterised by free markets and the absence of government intervention in the economy.
The examples of countries practicing the capitalistic...