An economy is a system of interrelated production, consumption, and exchange activities that ultimately determine the allocation of resources within a group. It is an area of the production, distribution, and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasizes the practices, discourses, and material expressions associated with the production, use, and management of scarce resources. An economy may represent a nation, a region, a single industry, or even a family.
An economy exists in a geographical area, such as a local area, country, or the world. It is a set of processes that involves its culture, values, education, technological evolution, history, social organization, political structure, legal systems, and natural resources as main factors. These factors give context, content, and set the conditions and parameters in which an economy functions.
Economic agents can be individuals, businesses, organizations, or governments. Economic transactions occur when two groups or parties agree to the value or price of the transacted good or service. There are different types of economies, such as command, traditional, market, and mixed. Each varies in their ideals and systems of controls. Economies are not borne in a vacuum. These controls, or regulations, are established by norms or laws put into place by those in power—usually a government—and they apply to individuals, industries, and governments alike.
Economics is the study of scarcity and its implications for the use of resources, production of goods and services, growth of production and welfare over time, and a great variety of other complex issues of vital concern to society. It is a social science with stakes in many other fields, including political science, geography, mathematics, sociology, psychology, engineering, law, medicine, and business. The central quest of economics is to determine the most logical and effective use of resources to meet private and social goals. Production and employment, investment and savings, health, money and the banking system, government policies on taxation and spending, international trade, industrial organization and regulation, urbanization, environmental issues, and legal matters (such as the design and enforcement of property rights) are just a sampling of the concerns at the heart of the science of economics.
