Economic Activities

All human beings, wherever they are, are required to perform some of the other activities to satisfy their needs.

They pursue different occupations to earn a livelihood and to get some psychological satisfaction.

Activities which have human beings undertake are known as human activities.

Some of these activities are undertaken to earn money but others are formed to derive personal satisfaction.

On examination of the human activities, one can find that some of these activities produce direct economic benefit, for example – working in an office, running a shop, etc. while others do not produce direct economic benefits, for example –  cooking, playing, going to school, going to temple, etc.

Types of Human Activities

Human activities can be classified into two categories :

Economic activities

Non – economic activities

Economic Activities

Activities that are undertaken by people with the object of earning money are known as economic activities. These activities are concerned with the production, exchange, and distribution of goods and services.

The purpose of economic activities should be an expectation of money income which is used for further creation of wealth or assets.

Example: Production of goods in a factory, distribution of goods by a wholesaler or retailer, working in a factory, working as a teacher in a school, etc.

Types of Economic Activities

Economic activities can be divided into three categories:

1. Business

2. Profession

3. Employment

1. Business: Business refers to those economic activities which are connected with the production, purchase, sale, or distribution of goods or services with the main objective of earning profit.

Examples: Fishing, mining, farming, wholesales, etc.

2. Profession: Profession refers to the activities which require special knowledge and skill to be applied by an individual in his work to earn a living.

These activities are subject to guidelines or codes of conduct laid down by professional bodies. The people who are engaged in professions are known as professionals.

For example, lawyers are professionals engaged in the legal profession governed by the bar council of India, doctors are professionals who are in the medical profession and are governed by the Medical Council of India.

3. Employment: Employment refers to an activity in which an individual works regularly for another person and gets remunerated in return.

Those who are employed by others are known as employees. The persons who engage others to work regularly for them are known as employers. The remuneration paid by the employer to the employee is known as salary or wage.

Example: Working in offices, banks, insurance companies, shops, as a manager, clerk, peon, salesman etc.

The distinction between Business, Profession, and Employment

Basis of DistinctionBusinessProfessionEmployment
1.CommencementBusiness may commence with the decision of entrepreneur.Profession may commence on completion of a degree course and by getting a certificate of practice.Employment commences on joining duty by entering into a service agreement.
2.QualificationNo minimum qualification required before starting business.Prescribed and professional qualification and training required.Qualification depends on the nature of job.
3.InvestmentCapital requirement depends on the scale of business.Limited capital investment is required.No capital investment is required.
4.RiskIn business there is always risk and uncertainty.In profession there is little with present.In employment there is no risk involved.
5.Transfer of InterestTransfer of interest is possible with some formalitiesTransfer of interest is not possible.Not possible to transfer the service contract.
6.Main ObjectivesThe main objective of business is to earn profit.The main objective of profession is to provide service.The main objective of employment is to earned income in the form of salary by satisfying the employer.
7.Code of conductThere is no prescribed code of conduct for business.Code of conduct is prescribed by the professional associations.The terms and conditions of service contract are applicable on employee.
8.Nature of work involvedIt involves production, purchase and sale or exchange of goods and services.It involves rendering of personalised services of specialised nature.It involves performing the work as assigned by the employer.
9.RewardReward for business is called profit.Reward for profession is called fees.Reward for employment is called salary or wage.

Non – economic Activities

The activities which are undertaken by an individual with a motive of getting psychological satisfaction are known as non-economic activities.

Example: going to temple, charity, social services, production for self-consumption, etc.

The end result of non – economic activities are not earning profit or creation of wealth but it gives satisfaction.

Whether an activity is economic or non-economic depends on the motive with which it is performed. The same activity can be the economy if it results in earning money and can be non-economic if end result is not monetary gain.

For example,  when a teacher is teaching in a school it is an economic activity because he or she gets a salary for teaching and when the teacher is teaching his or her son at home then it is non-economic as he or she will not get the monetary benefit for teaching but the end result is the satisfaction of teaching ones own child.

In the same way, when a farmer is producing crops for selling in the market, it is called economic activity but when he is cultivating crops for self-consumption then it is called non-economic activity.

Difference between Economic and Non-economic Activities

Point of DifferenceEconomic ActivitiesNon-economic Activities
1MotiveThese activities are undertaken with an economic motive of earning money and creation of wealthThese activities are undertaken with the social or psychological motive.
2ExpectationMoney income is expected from these activities.Money income is not expected from these activities.
3PurposeThe purpose of these activities is the creation of wealth.The purpose of these activities is psychological satisfaction.
4OutcomeThe outcome of these activities is the production of goods and services.The outcome of these activities is the mental satisfaction of persons who undertake them.
5ExamplesBusiness, Profession, Employment.Family-oriented activities, religious, Social service, and patriotic activities.

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