Economics is the study of how scarce resources (or factors of production) are used to produce the goods and services that will be distributed among people.

Economists address these three questions:

1. What goods and services should be produced to meet consumer needs?

2. How should they be produced, and who should produce them?

3. Who should receive goods and services?

The answers to these questions depend on a country’s economic system. The primary economic systems that exist today are planned and free market systems.

In a planned system, such as communism and socialism, the government exerts control over the production and distribution of all or some goods and services.

In a free market system, also known as capitalism, business is conducted with only limited government involvement. Competition determines what goods and services are produced, how they are produced, and for whom.