Economic Systems and Environmental Problems

Brett Kelly

Economic Systems and Environmental Problems

An economy is a system of production, distribution, and consumption of goods and services that satisfies people’s wants or needs. In any economic system individuals, businesses, and governments make economic decisions about what goods and services to produce, how to produce them, how much to produce, and how to distribute them.

There are 4 types of resources that go into creating an economic system, the first being natural resources, or natural capital. These are goods and services produced by the earth’s natural processes, which support all economies and all life. There are no substitutes for many of these natural resources, such as air, water, fertile soil, and biodiversity, and the natural income they provide. The second type of resource is human resources, these are human beings physical and mental talents that provide labor, innovation, culture, and organization. The third resource is financial resources, these are cash, investments, and monetary institutions used to support the use of natural resources and human resources to provide goods and services. The fourth resource is a manufactured resource, which are items made from natural resources with the help of human and financial resources. This type of capital includes tools, machinery, equipment, factories, and transportation and distribution facilities used to provide goods and services.

There are two major types of Economic systems are command and market. In a pure command economic system, the government makes all economic decisions about what and how much goods and services are produced, how they are produced, and for whom they are produced.

There are two types of market economic systems: pure free market and capitalist market. In a pure free market economic system, which so far exists only in theory, there are a few characteristics that define the market economic system. One is that all economic decisions are made in markets, in which buyers and sellers of economic goods freely interact without any government or other interference. All buying and selling is based on compensation, in which no seller or buyer can control or manipulate the market. All sellers and buyers have full access to the market and enough information about the beneficial and harmful aspects of economic goods to make informed decisions.

The capitalist market economic systems found the real world are designed to subvert many of the theoretical conditions of a truly free market. Here are the basic rules for a company operating in the world’s