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Economic Systems and Environmental

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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 capitalist market economies. Drive out all competition and gain monopolistic control of market prices on a global scale. Lobby for unrestricted global free trade that allows anything to be manufactured anywhere in the world and sold anywhere else. Lobby for government subsidies, tax breaks, or the regulations that give a company’s products a market advantage over their competitors and governments to bail them out if they make bad investments. Withhold information about dangers posed by products and deny consumers access to information that would allow them to make informed choices. Maximize profits by passing harmful costs resulting from production and sale of goods and services on to the public, the environment, and in some cases future generations. A company’s primary obligation is to produce the highest profit for the owners or stockholders whose financial capital the company is using to do business.

In making all of these important economic decisions there are internal and external costs. An internal cost is the direct or indirect cost, which are to be paid for by the seller and the buyer of an economic good. External costs are passed on to the public, the environment, and in some cases future generations. Some external costs are depletion of nonrenewable energy and mineral resources, produces solid and hazardous wastes, disturbs land, pollutes the air and water, contributes to global climate change, and reduces biodiversity.

There are a few things we can do to prevent environmental damage one is reducing resource use and waste by refusing, reducing, reusing, and recycling. Improve energy efficiency, rely more on renewable solar and geothermal energy, and shift from carbon based economy to solar- hydrogen based economy.

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