How open source community functions

1. I am new to Linux movement and want to understand how Linux and open source community functions.

Whether there is a core team to take decisions about final version of improvements? How that team is selected and co-ordinates with each other.

Whether Linux has its own releases without involvement of any distributor.

2. What is the role of distributors : how do they earn ? Why people buy their release which has a price when it is available for free download.

3. When any distro comes out with a new version which has a price, how it conveys source code to the community.

4. It involves a lot of effort, money and time : who pays for it or people are putting all this for free?

Wow!! Do you want the short version or the long version?

Short answer: The development of Open-Source software is about community collaboration. The "control rods" are consensus and peer-review. Freedom is about free access and unrestricted usage--not freedom from cost.
Teh revenue model varies widely, but is mostly based on some sort of added value--service, support, packaging with nice manuals, selling computers with Linux pre-installed, etc.

PS: If this is related to a class you are taking, then tell us more about what you are studying.

This will get you started;

http://wiki.linuxquestions.org/wiki/FSF
http://www.linux.org/info/