In a broader sense, however, the market is not a particular place. In the most literal sense, a market is a place where things are bought and sold. People who invest money in a company in exchange for potential profits in the future are known as capitalists.Ĭapitalism is also known as a free-market economy. Entrepreneurship, or enterprise, is the act of combining the other factors of production-land, labor, and capital-to produce goods and services. Labor is the human effort that is needed for production. Land includes both the land itself and any resources that come from it, such as oil, natural gas, iron, and timber. The other factors of production are land, labor, and entrepreneurship. It describes all the man-made resources that people use to produce goods and services, such as factories, machinery, tools, and computers.
The word capital refers to one of the factors of production. Many countries-including the United States, Great Britain, Germany, and Japan-practice some form of capitalism. Capitalism differs from centrally planned, or command, economies, in which the government owns companies and the factors of production. Individuals also own and run most companies, which compete with other companies for business. Capitalism is an economic system in which private individuals own and control most of the factors of production-the resources used to produce goods and services.
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