Capitalism is an economic system where private individuals or businesses own and control the means of production, such as factories, land, and resources. These owners, called capitalists, invest capital (money or assets) to produce goods and services for profit. Prices for these goods and services are generally determined by supply and demand in a free market, where buyers and sellers interact. Competition among businesses is a key characteristic, with each striving to offer better or cheaper products than its rivals. The pursuit of profit motivates economic activity, and individuals are generally free to engage in economic transactions of their choosing. Employment is typically based on a contractual agreement between employers and employees, where wages are exchanged for labor.