Capitalism is a market economy. The preferences of sellers and buyers are registered on the supply and demand sides of various markets, and the outcome of these choices is a system of the product and resource prices. These prices are guideposts on which resource owners, firms, and consumers make and revise their free choices in the furthering their self-interests. Limited Government - A competitive capitalist economy promotes a high degree of efficiency in the use of its resources. Consumer Goods are defined as goods that satisfy wants directly, while Capital Goods do so indirectly through the more efficient future production of consumer goods - machinery to pasteurize milk.
Specialization also works on a geographic basis - regional or international.
Self-sufficiency breeds inefficiency. Society enhances efficiency by division of labor . Individuals, firms, and nations have ability and skill differences. Specialization is efficient by saving time - avoiding the loss of time involved in shifting from one job to another and the process allows for the development of appropriate skills and to discover improved techniques. The Market must address several fundamental questions.