In this section, you'll examine the basics of economies, which refer to the social institution through which a society\u2019s resources (goods and services) are managed. The Agricultural Revolution led to development of the first economies that were based on trading goods. Mechanization of the manufacturing process led to the Industrial Revolution and gave rise to two major competing economic systems. Under capitalism, private owners invest their capital and that of others to produce goods and services they can sell in an open market. Prices and wages are set by supply and demand and competition. Under socialism, the means of production is commonly owned, and the economy is controlled centrally by government. Several countries\u2019 economies exhibit a mix of both systems. Convergence theory seeks to explain the correlation between a country\u2019s level of development and changes in its economic structure.<\/p>\r\n\r\n
In this section, you’ll examine the basics of economies, which refer to the social institution through which a society\u2019s resources (goods and services) are managed. The Agricultural Revolution led to development of the first economies that were based on trading goods. Mechanization of the manufacturing process led to the Industrial Revolution and gave rise to two major competing economic systems. Under capitalism, private owners invest their capital and that of others to produce goods and services they can sell in an open market. Prices and wages are set by supply and demand and competition. Under socialism, the means of production is commonly owned, and the economy is controlled centrally by government. Several countries\u2019 economies exhibit a mix of both systems. Convergence theory seeks to explain the correlation between a country\u2019s level of development and changes in its economic structure.<\/p>\n
The learning activities for this section include:<\/p>\n