Which economic system is based on open competition in a free market?

The economic system based on open competition in a free market is capitalism. In capitalism, private individuals or businesses own capital goods and have the right to make their own economic decisions, which includes what to produce, how much to produce, and at what price to sell goods and services. This system promotes competition among businesses, leading to innovation and a variety of choices for consumers.

The free market aspect of capitalism allows prices to fluctuate based on supply and demand. This means that, in an ideal capitalist market, no single entity controls the market, and thus, consumers and businesses engage in voluntary exchanges that determine the allocation of resources.

In contrast, socialism involves government ownership and control of major industries, aiming to distribute wealth more evenly among the population. Communism goes further, advocating for a classless society where all property is publicly owned, leading to significant limitations on personal economic freedom. Feudalism is a historical system based on the exchange of land for service, lacking characteristics of a market-driven economy.

Understanding capitalism's focus on free market principles highlights its role in fostering competition and consumer choice, setting it apart from the other economic systems.