Capitalism is an economic system where private individuals own and control property and businesses. Socialism is an economic system where the means of production are owned and controlled by the state or public. Capitalism emphasizes individual freedom, profit motive, and market competition. Socialism emphasizes social welfare, equal distribution of resources, and state planning. In capitalism, prices are determined by market forces, while in socialism, prices may be regulated by the state.
Supply is the quantity of a good or service that producers are willing to sell at various prices. Demand is the quantity of a good or service that consumers are willing to buy at various prices. The law of demand states that, ceteris paribus, as price falls, quantity demanded rises. The law of supply states that, ceteris paribus, as price rises, quantity supplied rises. Market equilibrium is achieved when supply equals demand at a certain price level.