An economic system is a system which have several parts, each of which influences the other and is connected to the other. It is a system which includes different forms of organization such as businesses, financial institutions, government agencies, and individuals. It also refers to the distribution of resources.
A country’s economy is based on the production process. This process determines the size and quantity of the economy. Production may be made of materials (food, fuel, etc) or products (commodities, raw materials, etc. ).
The production process is controlled by a government (through its laws) in order to meet the requirements of consumers. There are three basic types of production – primary, secondary and tertiary. These categories of production are not mutually exclusive, they depend on the demand.
Primary production is made up of agricultural products such as food. Secondary production consists of manufactured goods such as machines, automobiles, and furniture. And tertiary production consists of services such as education, healthcare, and scientific research. The three categories are classified into three groups, primary, secondary, and tertiary production.
Economic growth is determined by three different levels of production. Production at the primary level leads to the production of new resources (new wealth) for future consumption. When production at the secondary and tertiary levels reaches its highest level, production at the first level comes to an end and production begins again.
The level of economic growth depends on the use of the productive capacities and the knowledge of the people and institutions in a country. This is especially true for countries that have produced great amounts of wealth in the past but, due to lack of knowledge and skills, have been unable to properly utilize the resources that have been produced in those years.
The production process also affects the distribution of wealth. This distribution refers to the allocation of resources in the economy. In the process of production, one class of people benefits and the other class suffers. The profit of this group is then passed on to the other group of people.
There is no such thing as the perfect or absolute economic distribution, as the distribution of wealth is influenced by different factors. But it is said that in a developed country the distribution of resources in the economy will be in line with the production that is done. and with the needs of people. In a developing country, the economy may be more unequal.
Economic distribution is determined by the rules of economics. The laws of economics are known as laws of supply and demand and, when applied to the distribution of wealth, they determine the distribution of resources within an economy.
Supply and demand determine the price of a commodity. If there is a greater supply of a commodity than there is a demand for it, the price will be higher than when there is less supply.
Production is the process of making something. It is important to analyze the production process of any item because it has a major influence on the production of that item. In a manufacturing industry, the process used to make the product is considered in the production of the item.
The production process can be divided into two types: primary production and secondary production. The first type refers to the production process that is used to make a new item. The second type refers to the production process that is used to make an already existing item.
Production refers to the amount of raw materials that are used to make an item. Production is divided into three parts: extraction, processing, packaging, and marketing. The production process is not complete when the commodity has been extracted from the earth.