The term "government" typically refers to an organized group of people who are responsible for making and enforcing laws within a particular territory. This definition includes the process of governance and policy-making, as well as the institutions and individuals involved in these processes. However, the option "an institution made up of people with common interest" does not accurately describe what government is, as government is not simply a group of individuals with common interests, but rather a group with specific roles, responsibilities, and structures designed to carry out governance and policy-making functions. Therefore, the correct answer is "an institution made up of people with common interest".