Economy is a science that studies the processes of production, distribution, accumulation and consumption of material goods. It is the restraint or moderation in spending, it is a saving.
In a figurative sense, economy means control to avoid waste in any service or activity.
The word “economy” derives from the addition of the Greek terms “oikos" (Home and "names” (custom, law) resulting in “rules or administration of the house, the home”.
The concept of economy encompasses the notion of how societies use resources to produce valuable goods and the way in which these goods are distributed among individuals.
Resource scarcity suggests the idea that material resources are limited and that it is not possible to produce a infinite amount of goods, bearing in mind that human desires and needs are unlimited and insatiable.
Based on this principle, economics observes human behavior as a result of the relationship between the needs of men and the resources available to satisfy those needs.
Economic science tries to explain the functioning of economic systems and the relationships with economic agents (companies or individuals), reflecting on existing problems and proposing solutions.
The investigation of the main economic problems and decision-making is based on four questions fundamentals about production: “What to produce?”, “When to produce?”, “How much to produce?”, “For whom to produce?".
Microeconomics and Macroeconomics are the two great branches of economics. Microeconomics studies the various forms of behavior in the individual choices of agents economics, while macroeconomics analyzes microeconomic processes observing an economy as one all.
Market economy
Market economy is an economic system in which organizations (banks, companies, etc.) can act with little interference from the state. It is the system proper to capitalism.
subsistence economy
It is an economic system based on the production of goods that are exclusively necessary for basic, immediate consumption. Where in production there is no surplus, nor any economic relationship with other producing markets.
See too:
- law of supply and demand