Which of the following best defines capitalism?

The definition of capitalism is accurately captured as an economic system based on private investment and profit. In capitalism, individuals and businesses own private property and the means of production, allowing them to operate and make decisions in pursuit of profit. This system relies on free markets where supply and demand determine prices and the allocation of resources. A key feature of capitalism is the emphasis on individual entrepreneurship and competition, which are seen as crucial for economic growth and innovation.

The focus on profit motives drives efficiency and allows businesses to respond to consumer needs, fostering a dynamic economic environment. This description aligns well with fundamental characteristics of capitalism compared to the other options that do not capture its essence.