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What is an economy?

Watch the video to discover how the factors of production work together to make a simple economy.

For the factors of production to be utilised to their fullest potential, they need to be organised into an economy.

An economy consists of various markets, which are essentially a gathering of buyers and sellers. Economic markets are mechanisms used to allocate scarce resources in an economy. A country’s economy is a macroeconomic topic, but an economic market is a microeconomic mechanism that explains how the economy works.

An economy consists of consumers who buy products and services, businesses who employ consumers and make goods, and the government at various level who both buy products, employ labour and levy taxes. Their collective interactions create a simplified economy.

Watch the video above where Nick explains what a simple economy looks like.
An efficient economy allows easier movement of labour from households to firms, goods and services from firm to firm, and goods and services from firms to households. It also allows an easier movement of labour from one firm to another, and goods and services from firms to households.
Here’s the big link to logistics: Efficient transport and logistics is a key part of enabling scarce resources to be allocated easily and quickly based on factors relating to time and geographical location. Efficient logistics systems are therefore a key part of effective markets and economies.

Your task

Where do you and your employer fit into the economy outlined in the video?
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What is Economics in Global Logistics?

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