An economy is a place of collective production, distribution and exchange, and consumption of various goods and services by various producers. In broad terms, it’s defined ‘as an informal system, emphasis on the practices, discourses and material expression related to the operation of economically productive enterprises’. It is characterized by specialization within the economy (e.g., distribution) as well as a large and diversified level of interaction among economic agents (e.g., market). The scope of this article concerns advice on starting your own online home based business.
As is the case in any economy, the size and number of economically active people and firms are crucial determinants of output and employment. Economic activity is also affected by natural resources. A large portion of the earth’s total volume of available natural resources is utilized by human producers and consumers, including plant life and animal products used for food, clothing, fuel, shelter and other goods. Because of these natural resources, the economic value of human labor and effort is highly determined by the natural resource base of the economy. The economy is dependent on these natural resources for the extraction, processing, transportation, processing, treatment, retailing, etc.
The process of converting raw materials into goods and the process of collection, storage, marketing, distribution, etc., are all part of the activity of economic agents and are the means through which goods are produced and marketed into consumers and investors. The distinction between the natural and the economic environment is important in understanding the nature and function of the economy. Natural environments are those in which the economy does not depend on the intervention of external factors such as weather, soil quality, geology and other physical constraints. On the other hand, capitalist economies rely on the intervention of external factors to help determine their value and condition, including the laws of demand and supply.
The concept of economy refers to the process by which goods and services are produced and marketed. A market economy is characterized by a fluid process whereby goods are produced and marketed in an open market. The theory of market economy holds that in a pure market system, prices for goods and services will be set equal and based on supply and demand. A problem with this theory is that it fails to distinguish between economies and markets, and consequently, produces two very different concepts – one based on market exchanges and the other based on the principle of value.
The term economy can also be interpreted in terms of the distribution of income or wealth in society. In a truly democratic economy, all members of the society have an equal right to decide how their money is invested and how they spend it. For instance, the value of what a person creates in a product like a machine or house is measured by its ability to contribute to the economic well-being of the community.
A scarce resource is any item or aspect of a physical nature that is valuable in relation to other items or aspects. Therefore, all goods and services are considered as scarce resources. A scarce resource is often defined in terms of the amount of physical capital necessary to produce a good or service. In a truly global economy, all production must take place in local markets so that national goods and services do not deflate due to overuse of a scarce resource. On the other hand, a market economy is characterized by the liberalization of production processes and by the reduction of costs associated with production.
An informal economy operates in a manner very different from the formal and developed economy. In informal economies, production and distribution of wealth are based on relationships established through customary norms and without any intervention by external economic agents. This type of economy has been widely considered as a potential alternative to the present socio-economic order, with its attendant constraints on human rights, freedom, and the rule of law. Informal economic activity is characterized by household production, such as gardening, and by the exchange of goods and services for cash.
Economics is a subject of great practical importance in present-day society. It deals with methods of measurement, analysis, distribution, investment, and decision-making. All of these aspects have important effects on the efficient and effective operation of an economy. The field of economics is widely studied and discussed by a number of students and individuals interested in pursuing different professions. Students interested in economics can choose from a wide variety of courses offered at leading educational institutes. Economics curriculum consists of courses on micro-economics, macro-economics, public finance, accounting theory, research methodology, decision theory, economic growth, business theory, psychology of enterprise, entrepreneurship, ontology, micro-credit, risk, and business cycle.