Final answer:
In capitalism, a market-oriented economy, firms succeed or fail based on their ability to meet consumer needs. This system is characterized by economic freedom, voluntary exchange, private property rights, and the profit motive, with demand and supply determining market outcomes.
Step-by-step explanation:
In capitalism, also known as the market-oriented economy, success or failure depends on how well firms can perceive and meet customer needs and wants. In this economic system, it is believed that firms, rather than governments, are in the best position to determine if their actions will attract more customers or improve efficiency. Capitalism allows producers the economic freedom to decide what to produce, how to produce it, and for whom to produce, while consumers have the power to determine which products they prefer, directly influencing what is produced based on demand.
Characteristics of capitalism include the ability for individuals to own private property, possess the right to engage in voluntary exchange, and pursue the profit motive. It's also a system where competition among sellers helps maintain low prices due to their endeavors in attracting and retaining customers. Overall, markets and the laws of demand and supply act as the primary social mechanism for addressing the key economic questions within this type of economy.