The system of capitalism affects industries in several ways. In a capitalist economy, businesses and industries are relatively free to make their own decisions with little interference from the government. As a result, the owners of business and industry know the government won’t interfere much in the decisions they make. Under the capitalist system, the laws of supply and demand determine prices and wages. Business owners are free to take risks in the hope of making a lot of money. By being free of government control and/or many government restrictions, businesses and industries are willing to invest money in order to expand and to try new techniques. They are willing to try new, innovative ideas knowing that if they are successful, they may be able to reap significant profits. They also know there won’t be many artificial barriers to running the business. This will allow the business or the industry owner to maximize profits. This profit incentive is very strong in a capitalist economy. This is one factor that encourages economic and business growth, development, and innovation, and it has a very significant impact on the businesses and industries within the economy.
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