Commercial Economy

Definition

A commercial economy is an economic system where goods are exchanged in markets through buying and selling activities with the aim of making profit. It emerged in Europe during late Middle Ages replacing feudal economy.

Analogy

Imagine if you ran a lemonade stand. You buy lemons at a certain price (your cost), make lemonade (adding value), then sell each glass for more than it cost you (making profit). That's basically how a commercial economy works!

Related terms

Mercantilism: An economic theory prevalent during 16th-18th century that advocated government regulation of nation's economy for augmenting state power at expense of rival national powers.

Capitalism: An economic system characterized by private ownership where investment is made with intention of making profits within market system.

Guilds: Associations formed by artisans and merchants in medieval and early modern Europe which controlled the practice of their craft in a particular town.