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What are the advantages of capitalism?

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Quick Answer

Some benefits of capitalism include efficient production, economic growth, political and economic freedom, and efficient allocation of resources. Many believe that capitalism offers a better alternative to other economic systems.

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Full Answer

In capitalism, government’s limited control over businesses leads to healthy competition. This leads to efficient production, which prevents firms going out of business. Economic growth occurs when people having the freedom to conduct business. This allows people to work harder and be innovative, leading to economic expansion which brings about an increase in the gross domestic product.

Capitalism encourages economic freedom because of the lack of government intervention in businesses. Some believe that this economic freedom is in some way related to political freedom. Capitalism ensures that goods and services are distributed according to consumers' wants, bringing about efficient allocation of resources, with firms only producing what the consumers prefer.

Capitalism increases efficiency over time as firms respond to new consumer preferences. Black markets decrease, because there are no restrictions on types of business. Additionally, capitalism increases production, subsequently increasing the wealth of the nation. The lack of government interference regarding who enters the market presents fair opportunities for all who engage in businesses. The quality of goods also improves as a result of prioritizing customer needs.

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