I. ECONOMIC SYSTEMS
1. Definitions
An economic system is the system of production, distribution and consumption
of goods and services of an economy. Alternatively, it is the set of principles and
techniques by which problems of economics are addressed, such as the economic
problem of scarcity through allocation of finite productive resources
The econonic system is composed of people and institutions, including their
relationships to productive resources, such as through the convention of property.
Examples of contemporary economic systems include capitalist systems, socialist
systems, and mixed economies. "Economic systems" is the economics category that
includes the study of respective systems. Currently capitalist system is the world's
most dominant form of economic system.
An economic system can be defined as a "set of methods and standards by which
a society decides and organizes the allocation of limited economic resources to
satisfy unlimited human wants. At one extreme, production is carried in a private-
enterprise system such that all resources are privately owned. It was described by
Adam Smith as frequently promoting a social interest, although only a private
interest was intended. At the other extreme, following Karl Marx and Vladimir
Lenin is what is commonly called a pure-communist system, such that all resources
are publicly owned with intent of minimizing inequalities of wealth among other
social objectives".
2. Type of Economic System
Three types of economic systems exist, each with their own drawbacks and
benefits; the Market Economy, the Planned Economy and the Mixed Economy.
An economic system is loosely defined as country’s plan for its services, goods
produced, and the exact way in which its economic plan is carried out. In general,
there are three major types of economic systems prevailing around the world.
2.1 Market Economy
In a market economy, national and state governments play a minor role. Instead,
consumers and their buying decisions drive the economy. In this type of economic
system, the assumptions of the market play a major role in deciding the right path

II. SUPPLY AND DEMAND
Supply and demand is an economic model of price determination in a market. It
concludes that in a competitive market, the unit price for a particular good will vary
until it settles at a point where the quantity demanded by consumers (at current
price) will equal the quantity supplied by producers (at current price), resulting in an
economic equilibrium of price and quantity.
Supply is the amount of product that a producer is willing and able to sell at a
specified price, while demand is the amount of product that a buyer is willing and
able to buy at a specified price. Thus, the supply and demand model shows the
relationships between a product’s accessibility and the interest shown in it. Unlike
with general equilibrium models, however, this model does not define the attributes
that are responsible for supply schedules
Supply
Supply is The quatity of a good sellers wish to sell at each convervable price.
Supply is not a particular quantity but a complet description of the quatity that
sellers wouls like to sell at each and every possible price.
Law of Supply
As the price of a product rises, ceteris paribus, suppliers will offer more for sale.
This implies that price and quantity supplied are positively related. The major factor
that influences supply is the "cost of production", and includes:
1. Input prices - As the prices of inputs such as labour, raw materials, and
capital increase, production tends to be less profitable, and less will be
produced. This leads to a decrease in supply.
2. Technology - Technology relates to methods of transforming inputs into
outputs. Improvements in technology will reduce the costs of production and
make sales more profitable so it tends to increase the supply.
3. Expectations - If firms expect prices to rise in the future, may try to product
less now and more later.
Supply Curves and Schedules
The relationship between the price of a product and the quantity supplied, holding

alternatives. Examples of substitute goods are Coke/Pepsi, and
butter/margarine. Usually, people substitute away to the less expensive good.
Other related products are classified as "complements". Complements are