The economic system where the means of production are privately owned and operated for profit is known as capitalism. This system relies on free markets where businesses compete, prices are determined by supply and demand, and individuals can accumulate wealth. Capitalism promotes innovation, efficiency, and consumer choice, but it can also lead to economic disparities and exploitation. The emphasis on individualism often contrasts with more collectivist systems like socialism. Understanding capitalism's mechanisms is crucial for analyzing modern economies and their implications for society.