anise money, industry or trade activities in a society. Economics deals with the production, distribution as well as consumption of wealth with the problems related to labour, and finance of the country.

Section 1.2: Scarcity and choice:

Scarcity and choice are considered as two major problems in economics. Scarcity refers to the term in, which there is a shortage of the supply of good and materials for the people, whereas choice refers to the term in, which the people produce goods and services in order to fulfil the basic needs of the consumers (Gillespie, 2011). The requirements of the people are not unlimited, but the resources that are available to fulfil the requirements of the people are limited. Furthermore, the factors, which are used for producing the goods and products are labour, capital, and equipment. These factors are directly dependent on the available resources, which are limited to utilise (Baumol and Blinder, 2015).

Section 1.3: The price mechanism:

The price mechanism is the system in, which the demand and supply forces of the consumers determine the costs of the goods and products that are produced. The price mechanism has its impact on both the buyers as well as the sellers in the market due to, which the decisions related to the economy are taken by considering price mechanism. Moreover, the price mechanism system would also be beneficial in explaining the ways in, which the free market economy distributes the resources as well as helps in analysing the prices of the products and services developed in the industry (Meade, 2013).

Section 2: Pure Market Economy

Section 2.1 Introduction:

Hummel and Stringham (2010) argued that the pure market economy has been determined as an economic system which depends heavily on markets for assigning resources as well as for addressing all queries regarding their allocation. In the pure market economy, the markets are used by buyers as well as the sellers in order to sell or exchange the products and services. In these types of economies, the potential markets are utilised by sellers as well as buyers for willingly exchanging services, goods as well as resources (Hummel and Stringham, 2010).