2. An economy refers to the system by
which goods and services are
produced, distributed, and consumed
in a society. It encompasses the
various activities and interactions
that take place within a community,
region, or country, involving the
production of goods and services, the
distribution of resources, and the
exchange of value.
3. • Economies can be classified into different types based on their
organization and characteristics. The two primary types are:
• Market Economy: In a market economy, decisions regarding
the production, distribution, and consumption of goods and
services are primarily determined by the forces of supply and
demand in the open market. Prices are set by market
interactions, and individuals and businesses make decisions
based on their own self-interest.
• Command or Planned Economy: In a command or planned
economy, the government plays a central role in making
decisions about what goods and services are produced, how
they are distributed, and what prices are set. The government
typically owns or controls major industries and resources.
Most real-world economies are mixed economies, incorporating
elements of both market and planned systems.
