An economic environment includes: Individuals, businesses, and government.

Individuals make the buying decisions as money is a limited resource, they need to rationally
make decisions on how to spend their money and on what.
For businesses to be profitable, managers should have a right balance of inputs. The inputs
are referred to as the five factors of productions and they include – natural resources, labour,
capital, knowledge, and entrepreneurs.
Natural resources consist of raw materials and land, labour includes human resources,
knowledge includes skills possessed by the employees hired, capital involves the assets
involved in running a business, and entrepreneurs includes the person who commences the
business. For the running and smooth operation of a business all of these factors are crucial.
Government plays a significant role as it forms the policies related to the business, lays down
taxes and ensures supply of skilled and knowledgeable labour.
The economy is divided in two parts – microeconomy and macroeconomy.
Microeconomics is the study of how people, households, and businesses make decisions and
distribute resources. It mainly pertains to markets for products and services and addresses
both personal and financial concerns.
The area of economics known as macroeconomics focuses on the operation and behaviour of
an economy as a whole. It focuses on the overall developments in the economy, including
inflation, growth rate, GDP, and unemployment.
The management of the five components of production constitutes an economic system. An
economic system, for instance, may be privately or publicly owned.
There are 4 different kinds of economic systems:
Market Economy: A market economy is a kind of capitalism in which a nation's businesses
and citizens interact to determine economic policy and the cost of goods and services.
Although there may be some central planning or government interference, this phrase
typically denotes a more generally market-oriented economy.
Communism: A political and economic system known as communism advocates for a
classless society in which the means of production are owned collectively and private
property is non-existent or severely restricted. Communism puts itself in opposition to liberal
democracy and capitalism.
Socialism: In general, socialism refers to a political and economic system in which the state
or government typically controls property and the means of production. The foundation of
socialism is the notion that a more equitable society results from shared or public ownership
of resources and production tools.
Mixed Economy: A system that has elements of both capitalism and socialism is called a
mixed economy. A mixed economy protects private property and permits some economic
freedom in the use of capital, but it also permits government intervention in the economy to
further social objectives.
There are four types of competition – Perfect, monopoly, oligopoly, and monopolistic.
References:
Sexty, R. (2020). Canadian Business & Society: Ethics, Responsibilities, and Sustainability.
5th Edition. Toronto, ON: McGraw Hill Canada.
What is macroeconomics? definition of macroeconomics, macroeconomics meaning. The
Economic Times. (n.d.). Retrieved August 27, 2022, from
https://economictimes.indiatimes.com/definition/macroeconomics
Team, T. I. (2022, August 26). Market economy definition. Investopedia. Retrieved August
27, 2022, from https://www.investopedia.com/terms/m/marketeconomy.asp