What is Economic Activities

Economic activities are those which are inspired by the objective of earning a profit, which is required by people to satisfy day to day needs of life.

These activities are primarily concerned with the production, distribution, and consumption of goods and services.

Economic activities include the work of a farmer, clerk, teacher, agent, doctor, trader, producer, etc. who produce and sell goods or render services for money.

Types of Economic activities:

  1. Business
  2. Profession
  3. Employment

1) Business:

Business is the production and sale, exchange or transfer of goods and services with a profit motive. The basic requirements for every business activity are to earn a profit. It is the profit that motivates and encourages people to undertake business activities.

It does not mean that the business should ignore all social and human norms for profit. In the process of earning profit through business activities, employees and customers’ interest shod be taken into account for the long survival of the organization.

It is not an easy task to maintain a proper balance to fulfil both it’s economic and social objectives because of a number of business risks.

Business as an economic activity involves the use of scarce resources for the satisfaction of immediate human wants.

Thus exchange or transfer of goods and services on a regular basis with a view to earning profits distinguishes it from other non-economic activities.

2) Profession:

A profession may be defined as an occupation that involves the rendering of personal services of specialized nature, based on professional skill, knowledge, education, and training. The professionals charge professional fees from their clients for the services rendered to them.

The main features of professionals are:

A) Rendering of services of a specialized nature: A professional renders just services. He does not deal in goods.

B) Formal education and training: A professional man means he is an expert in his concerned specialized field. To acquire expertise, formal education and training in the discipline pertaining to the profession are essential requirements of a profession.

C) Central representative organization: In every profession, there is an apex institution that issues licenses and grants membership to practitioners.

D) Domination of services motive: A professional must keep his self-interest sub-ordinate to the interest of the society.

E) A professional can’t advertise himself.

3) Employment:

It is an economic and human activity based on a contract between the employer and employee, under which the employee renders services for the employer against a payment called salary and wages.

Features of employment are:

A) Contract: The basis of employment is a contract effected between the employer and employee, which specifies the details of works assigned to the employee and terms and conditions of the employment, such as wages and salary, working hours, others benefits, etc.

B) Employer-Employee relationship: Employment creates a relationship between two parties. The first party is the employer who assigns the job to the other party called employee.

Importance of Economic Activities:

1) International trade: The discovery of the sea routes by Columbus to an extension of business activities with foreign countries.

2) Industrial revolution: During 1760 to 1820, the production process started changing by introducing the mechanical process replacing the earlier manual process.

Growth of Economic activities in India:

A) Family-centred village communities: Cultivation, fishing, hunting, plucking and collecting of fruits were the main activities to keep themselves alive.

B) Growth of Bazaars: Gradually to remove the difficulties to the barter system, as a medium of exchange, like shells, coaches and even self or specified quantities of food grain.

C) Town Economy: Gradually to remove the difficulties of a barter system, coins came into use to serve as the medium of exchange.

D) Growth of Business: During British rule, India, as well as railway transport, started growing in India on modern lines.

Difference between Economic And Non-economic Activities:

1) Economic activities are based on economic motives.

Non-economic activities are based on social or psychological motives.

2) Money income is the main expectation of these economic activities.

Money income is not expected from these activities but status, love, and affection, etc.

3) These activities are undertaken for the creation of wealth or assets.

These activities are undertaken for physiological satisfaction.

Related:

WHAT IS BUSINESS?

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