Economic System - The way in which a nation allocates its resources among its citizens
Factors of Production – The resources used to produce goods and services: labour,
capital, entrepreneurs, and natural resources.
Labour – The mental and physical training and talents of people.
Capital – The funds needed to operate an enterprise.
- Investment by owners, entrepreneurs, partners who start the business, or investors
who buy stock
Entrepreneurs – An individual who organizes and manages labour, capital, and
natural resources to produce goods and services to earn a profit.
Natural Resources – Items used in the production of goods and services in their
natural state, including land, water, mineral deposits, and trees.
Information Resources – Information such as market forecasts, economic data,
and specialized knowledge of employees that is useful to a business and that helps it
achieve its goals.
Types of Economic Systems
Command Economy – An economic system in which government controls all or most
factors of production and makes all or most production decisions.
Communism – A type of command economy in which the government controls all or
most factors of production.
Socialism – A kind of command economy in which the government owns and
operates the main industries, while individuals own and operate less crucial
- Large proportion of people work for the government
Market Economies – An economic system in which individuals control all or most factors
of production and make all or most production decisions.
- B2B (business to business transactions) is more efficient than B2C (business to
consumer, ordering things over the internet).
- Very little government involvement.