People and societies develop economic systems to deal with the basic economic problems raised by scarcity and opportunity costs. The three fundamental economic systems are market, command, and traditional. A simple illustration of a pure market economy is the Circular Flow Model.
Productivity is the amount of output per unit of input used.
The most common measure of productivity is labor productivity - output per hour worked. The price of a good or service is always determined by the interaction of supply and demand. Supply - The amounts of goods and services that people are willing and able to supply at various prices. Demand - The amounts of goods or services that people are willing and able to buy at various prices. Money is anything that is generally acceptable in exchange for goods and services.