What is an economic system?

An economic system is a system that is based around the foundations of production, resource allocation, exchange and distribution of goods and services to satisfy unlimited wants. The economic system also involves the Economic problem, which is a fundamental concept that human wants are unlimited but the resourced available to satisfy these wants are limited. To help manage this, economic systems must answer the 3 following questions:

What will be produced?

How will the goods and services be produced?

And to whom are the goods and services to go?

From this, opportunity costs are then made. An opportunity cost involves foregoing an possibility in order to choose another opportunity. E.g. Picking one school sport over another because they where on the same night. 

Resources are one of the most important aspects of any economy. A resource is defined as anything which can be used to produce a good or service to satisfy a want. 

These include:

Land which is provided by nature for human use. Such as forests or agriculture. 

Labour which refers to human effort in the production process, both physical and intellectual. Such as a teacher or a baker.

Capital referring to the produced means of production. For example, machinery or tools.

Enterprise the risk taker that makes the decision of how to combine the other 3 resources together.