What type of economic system rewards firms for their ability to identify and serve the needs and demands of customers?

The private enterprise system is characterized by the freedom of individuals and businesses to operate competitively for profit with minimal government intervention. In this type of economic system, firms are motivated to identify and meet customer needs effectively, as their success is directly tied to their ability to serve consumers and adapt to changing market preferences. This competitive environment encourages innovation, efficiency, and high-quality service, as businesses strive to attract and retain customers in order to succeed and grow.

Other economic systems, such as a planned economy and socialism, focus more on government control and planning over production and distribution, which can stifle individual initiative and responsiveness to consumer demand. A mixed economy, while incorporating elements of both the private enterprise system and government intervention, does not emphasize the reward for customer satisfaction to the same extent as a purely private enterprise system does. Hence, the private enterprise system is the most aligned with rewarding firms for recognizing and fulfilling customer demands.