Simple Economy

What is Simple Economy?

Simple Economy is defined as: Every individual in the community is occupied in the manufacturing of some goods or services and they require an amalgam of many goods and services not all of which are produced by them.

Any apportionment of resources of the community would result in the manufacturing of a particular combination of distinct goods and services. The goods and services thus manufactured will have to be allocated among the individuals of the community.

Types of Simple economy

  • Manufacturing
  • Agriculture
  • Services

Examples of Simple Economy

Manufacturing: A weaver has yarn, cotton and other implements essential for weaving cloth.

Agriculture: A family possesses a piece of agricultural land, some grains, farming tools, a pair of bullocks and the employment services of the family members.

Services: The teacher in the school has the skill sets needed to proclaim education to the students. In society, others may not have any resource apart from their own employment services. Each of these decision-making units can manufacture some goods or services by using the resources that they possess and use part of the production units to acquire many other goods and services which it requires.

The above mentioned is brief information about Simple Economy. To know more, stay tuned to BYJU’S.