Economic Activities

What are Economic Activities?The economic activities are the set of activities carried out by human beings to satisfy their needs. The economic activities

produce goods and give services that people need or wish. The economic activities have 3 factors:

Production

Commercialization and distribution

Consumption

The production of goods needs

natural resources,

technology and work. People produce two

types of goods:

The production of services needs organization and infrastructures (like a High School in the Educational System).

Consumption goods

Production goods

Commercialization and

distribution include:

Storage

transport Sale

Wholesale

Retail

We can satisfy our needs

consuming goods.

If we buy material

goods, we are consumers.

But, when

we use a

service, we are users.

Types of Ecomomic ActivitiesPrimary group:

employs people to collect or produce

natural resorces from the land or sea, like farming and fishing.Secondary group:

makes or manufactures goods,

like car assembly.Tertiary group:

provides services for people, like the High

School.Quaternary group: is a new definition related

with high tech. service, industry that carries out research

and provides information and

advice.

Capitalism: Market economy.The fundamental idea is that fair prices are only obtained with the law of

supply and demand , which helps people to satisfy their needs better.

Market is the place where we can buy

and sell goods. In

markets we find sellers (supply) and

buyers (demand).

Sellers want to obtain the

highest profit and buyers

want to obtain the lowest prices. For

capitalism, the relation between

buyers and sellers must

be free.

Prices depend on the quantity

of goods and buyers. If

there are too many buyers in the market

and few goods,

prices will rise. If there are

many goods in the

market, price will go down. Other factors, like publicity,

can change markets and

prices.This is the law of supply and demand.

Economic AgentsCitizens, lobbies, companies or public and private institutions are parts of

the markets. They are the economic agents. The most important are:

Families: Each family uses a big part of their

wages to buy goods and services.

Companies produce and distribute goods

and services.

Public sector is the group of economic and social activities

that States must offer to the citizens.

CompaniesCompanies produce goods and services. They need work and capital. Capital is the set of resources that one company must use to produce something: money, buildings, tools, etc. Cost price is the price of production: raw materials, energy,

transport, wages, taxes, etc. Market price must be higher than the cost price. The difference between the two is the profit. Companies can be primary, secondary, tertiary and quaternary according to their activity . But according to their size, the

companies can be multinational (corporations), large, middle and small.

Public sector To support the public administration (central government, regional government, town

council). To promote the economic activity and the social relations with infrastructures, public

works... To offer public services, as education, health, transport, police... To offer pensions, unemployment subsidy, to attend to natural disasters, etc.

Normally, States use taxes and other income to pay for these services.