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The rusting of metals, the process involved in photography, the way living systems produce and utilize energy, and the operation of a car battery, are but a few examples of a very common and important type of chemical reaction. These chemical changes are all classified as "electron-transfer" or oxidation-reduction reactions.

The term, oxidation, was derived from the observation that almost all elements reacted with oxygen to form compounds called, oxides. A typical example is the corrosion or rusting of iron as described by the chemical equation:

4 Fe + 3 O₂ -----> 2 Fe₂O₃

Reduction, was the term originally used to describe the removal of oxygen from metal ores, which "reduced" the metal ore to pure metal as shown below:

2 Fe₂O₃ + 3 C -----> 3 CO₂ + 4 Fe

Based on the two examples above, oxidation can be defined very simply as, the "addition" of oxygen; and reduction, as the "removal" of oxygen. But there is a lot more to "oxidation-reduction", as described in the following sections.

Source :  http://naio.kcc.hawaii.edu/chemistry/introduction.html