Economy

In today's interconnected global landscape, understanding economic systems is more important than ever. From the free market capitalism of the United States to the centrally planned economy of North Korea, these systems fundamentally shape how societies allocate resources, distribute wealth, and meet the needs of their citizens.

The words economy and economics are often used interchangeably, but they have distinct meanings. While both are interrelated and essential to understanding how societies function, they serve different purposes. The economy refers to the actual system of production, distribution, and consumption of goods and services within a country or region. Economics, on the other hand, is the study of these systems, analyzing their functioning, efficiency, and impact on human life.

In the late 18th century Adam Smith wrote about the impact of competition on firms’ abilities to set prices and make profits above a “natural” level.

However, there was no formal analysis of the situation until British economist Alfred Marshall published Economic Principles in 1890. The ideas in Marshall’s model remain a key part of mainstream economic theory, although the theory has been criticized as not representing the true nature of competition.

The elasticity of demand is its responsiveness to changes in another factor, such as price. British economist Alfred Marshall is generally credited as the first economist to define the concept in 1890, but the German statistician Ernst Engel published a paper five years earlier, showing how changes in income alter the level of demand. The origins of the concept may be disputed, but its importance is not.