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Economic Systems-Business And Its Environment

   Posted On :  04.05.2018 04:05 am

Economic system is a social organism through which people make their living.

Economic Systems
 
 

Meaning

 
 
Economic system is a social organism through which people make their living. It is constituted of all those individuals, households, farms, firms, factories, banks and governments, which act and interact to produce and consume goods and services. Individuals and households put their resources (land, labour, capital and skill) to one or more of their alternative uses and make their living; firms buy factors of production and organize them in the process of production, produce goods and services, and sell them to their users to make projects.

Consumers are able to get the goods and services of their requirement; producers are able to produce and sell various kinds of products in appropriate quantities and so on. The system is operated by, what adam smith Called “Invisible Hands”, the market forces of demand and supply.
 
A modern economic system is enormously complex. Millions of people participate and contribute to its working in different capacities  – as producers, traders, workers, consumers and financers and so on. Thousands of people are involved in production and distribution of single commodity. A community, before it reaches its final consumer, passes through a complex process of production and through a number of intermediary hands.

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