Which economic system is characterized by private ownership of production factors?

The economic system characterized by private ownership of production factors is capitalism. In capitalism, individuals or businesses own the means of production and can make decisions about their use, investments, and distribution of goods and services. This system encourages competition and innovation, as private owners strive to maximize their profits and can engage in voluntary exchanges in a market economy.

Under capitalism, the allocation of resources and goods is determined largely by market forces rather than by a central authority. This creates opportunities for personal economic freedom and wealth creation, while also posing the challenge of economic inequality.

In contrast, socialism emphasizes collective or government ownership of key production factors, aiming for a more equitable distribution of wealth. Feudalism, an earlier economic system, was based on land ownership and a rigid social hierarchy, while communism advocates for a classless society where all property is shared. Each of these systems represents a different approach to ownership and management of production factors, contrasting with the foundation of private ownership found in capitalism.