3 MERITS OF CAPITALISM
ECONOMIC FREEDOM
• 1. Means the right to earn and retain
property. It also means a freedom of
enterprise and a choice of occupations
• Consumers have the freedom to choose
goods and services to consume,
enterprises have the freedom to choose
goods and services to produce
• This will lead to the sourcing of the
country’s manpower from different
sectors
• Thus, there is flexible functioning of
different units of productions.
VARIETY OF CONSUMER GOODS
• Competition takes place with regard
to all aspects of product such as
shape, colour, design and packaging.
Therefore, consumers will enjoy a
wide variety of the same product.
There is also a variety of consumer
goods because of freedom of
enterprise, resulting in greater
production
ENHANCED TRADE, BUSINESS,
RESEARCH AND
DEVELOPMENT(R & D)
• Entrepreneurs or producers are
always on the lookout for new
innovations to compete with other
producers
• This will lead to a drastic and rapid
expansion and an increase in
employment and income. Innovators
enjoy the benefits of their research
through copyrights, patents, etc.
 3 DEMERITS OF CAPITALISM
INFLATION AND HIGH UNNECESARRY VARIETY AND
UNEMPLOYMENT RATE WASTEFUL COMPETITION
• Disparity of demand and supply of • Too much competition will lead to
labour occurs since it is governed by unnecessary high costs of production.
the “invisible hand” (no government This is because the producers bid high
intervention). price for resources to make sure they
• Business fluctuations cause high produce high quality goods and
unemployment rates during a services in order to gain profit.
depression. • There will be a waste of resources as
some products are better advertised to
attract consumers, resulting in
consumemrs misinterpreting
advertisements and being misled.
MISALLOCATION OF
RESOURCES
• A producer’s objective is to
maximize profit and he will,
therefore, only produce products
which produce higher profits.
• This will lead to the production of
luxury goods resulting in surplus
and a lack of production of goods
for the poor.
 INFLATION AND
ECONOMIC HIGH
FREEDOM UNEMPLOYMENT
RATE

CAPITALISM

UNNECESSARY
VARIETY OF
VARIETY AND
CONSUMER MERITS DEMERITS
GOODS WASTEFUL
COMPETITION

ENHANCED
TRADE,
BUSINESS AND MISALLOCATION
RESEARCH AND OF RESOURCES
DEVELOPMENTS
(R & D)