It is an economic system where the trade and industries are controlled by private owners for profit, rather than by the state. Market economy is the basis of production. Market economy is basically production of goods and services is based on supply and demand in the general market. It also involves free trade as a component. Today, most countries practice a mixed capitalist system that includes some degree of government regulation of business and ownership of select industries. A prominent supporter of capitalist economy is united states of America. Instead of planning economic decisions through centralized political methods, as with socialism or feudalism, economic planning under capitalism occurs via decentralized and voluntary decisions. Capitalism developed historically out of previous systems of feudalism and mercantilism in Europe, and dramatically expanded industrialization and the large-scale availability of mass-market consumer goods. Private property rights are fundamental to capitalism. With a common pool resource, which all people can use, and none can limit access to, all individuals have an incentive to extract as much use value as they can and no incentive to conserve or reinvest in the resource. Privatizing the resource is one possible solution to this problem, along with various voluntary or involuntary collective action approaches. Capitalism has many unique features, some of which include a two-class system, private ownership, a profit motive, minimal government intervention, and competition. In Marxist theory, the class structure of the capitalist mode of production is characterized by the conflict between two main classes: the bourgeoisie, the capitalists who own the means of production and the much larger proletariat who must sell their own labour power. The economy is run by individuals (or corporations) who own and operate companies and make decisions as to the use of resources. But there exists a “division of labor” that allows for specialization, typically occurring through education and training, further breaking down the two class system into sub-classes. Consumer sovereignty is the system in which market is controlled by the demands of the consumer. It regulates the level of production undertaken by the companies, and the consumer is free to decide which products to purchase. Free trade is the system where, the low tariff barriers exist that promote international trade. In a capitalist economy, there is no government interference in the daily activities of the business. The customers and producers are free to make their own decisions regarding any product or service. Flexibility in labour markets in capitalism, there is a flexibility in hiring and firing of the workforce. Freedom of ownership .In thissystem, an individual can accumulate any amount of property and use it according to his will. After his death, the same property is passed on to the successors by the right of inheritance.