ECONOMIC

ACTIVITIES

RITVIK SHARMA &

SHORYA GOYAL
XII - E

WHAT IS ECONOMIC ACTIVITY?

Actionsthatinvolves

theproduction,distributionand

consumptionofgoodsandservicesat
alllevelswithinasociety.Grossdomestic
productorGDPisonewayofassessingeconomic
activity,andthedegreeofcurrenteconomic
activityandforecastsforitsfuturelevelcan
significantlyimpactbusinessactivityandprofits,
aswellasinflationandinterestrates.

TYPES OF ECONIMIC ACTIVITIES

PROFESSION

LAWYERS
DOCTORS
CA
CS

EMPLOYMENT

LABOURERS

BUSINESS

MANUFACURING

SERVICES
TRADING

PROFESSION
Aprofessionisanoccupationwhichinvolves

renderingofpersonalserviceofa
specialisednature.Theserviceisbasedon
professionaleducation,knowledge,trainingetc.This
serviceisprovidedforaprofessionalfeescharged
fromtheclients.Theprofessionalsaremembersof
professionalbodiesandconducttheiractivities
accordingtothestandardssetbythosebodies.The
professionalbodieshavetheirowncodeofconduct
whichmemberswillhavetoobey

PROFESSIONAL BODIS IN INDIA

MedicalCouncilofIndiaFormedicalprofession.
BarCouncilofIndiaForpractisinglawyersorfor

legalprofession.
InstituteofCharteredAccountantsofIndiaFor
accountingprofession.
InstituteofCompanySecretariesForCompany
Secretaryship
InstituteofCostandWorksAccountantsofIndia
ForCostaccountants

EMPLOYMENT
Whenapersonundertakestorender

personalserviceunderanagreementof
employment,heissaidtobeinserviceor
employment.Theserviceisrenderedforasalaryor
wageand/orotherbenefitsattachedtothatjob.
Theservicemaybeinagovernmentoraprivate
organisation.Thereisarelationshipofemployer
andemployee.Apersontakingupajobisan
employeeandthepersonwhoprovidesthe
serviceiscalledanemployer.

BUSINESS
Businessmaybedefinedasan

activityconcernedwiththe
production and exchange

of goods and services

with the objective of
earning profits.ThewordBusinessliterally
meansastateofbeingbusy.Everypersonis
engagedinsomekindofoccupationinordertoearn
onesliving.

TYPES OF BUSINESS ACTIVITIES

MANUFACTURING

BUSINESS
SERVICETRADING
ACTIVITIES

TYPES OF BUSINESS ACTIVITIES

1.

MANUFACTURING

Manufacturingistheproduction

of merchandisefor
useorsaleusinglabourandmachines,tools,chemicaland
biologicalprocessing,orformulation.Thetermmayrefer
toarangeofhumanactivity,fromhandicrafttohightech,
butismostcommonlyappliedtoindustrial production,
in which raw materials are transformed
into finished goods on a large scale.Manufacturing
takesturnsunderalltypesofeconomicsystems.Inafree
marketeconomy,manufacturingisusuallydirectedtoward
themassproductionofproductsforsaletoconsumersata
profit.

TYPES OF BUSINESS ACTIVITIES

2.SERVICE
Aserviceisanintangiblecommodity.Service
provisionisoftenaneconomicactivitywherethe
buyerdoesnotgenerally,exceptbyexclusive
contract,obtainexclusiveownershipofthething
purchased.Thebenefitsofsuchaservice,ifpriced,
areheldtobeself-evidentinthebuyer'swillingness
topayforit.Publicservicesarethose,thatsociety
(nationstate,fiscalunion,regional)asawholepays
for,throughtaxesandothermeans.

TYPES OF BUSINESS ACTIVITIES

3.TRADING
Tradeinvolvesthetransferofthe ownership of goods
or servicesfromonepersonorentitytoanotherin
exchangeforothergoodsorservicesorformoney.
Tradebetweentwotradersiscalledbilateral trade,
whiletradebetweenmorethantwotradersiscalled
multilateral trade.Tradingisavalue-added function:
itistheeconomicprocessbywhichaproductfindsits
enduser,inwhichspecificrisksarebornebythe
trader.

CHARACTERISTICS OF BUSINESS
ENTREPRENEURSPRESNCE:

Theremustbesomeonetotakeinitiativeforestablishingabusinessandundertake
theriskassociatedwiththesame.

ECONOMICACTIVITY:

Businessisconsideredasaneconomicactivityasitisundertakenwiththe
objectiveofearningmoney.

PRODUCTIONORPROCUREMENTOFGOODSAND

SERVICES:
Everybusinessenterpriseeitherproducesorprocuresgoodsandservicesfrom
producers.

CHARACTERISTICS OF BUSINESS
REGULARITY:

Animportantfeatureofbusinessisthatitmustsellorexchangegoodsandserviceson
regularbasis.Singletransactioncannotconstitutebusiness.

SALEOREXCHANGEOFGOODSANDSERVICES:

Businessinvolvessaleorexchangeofgoodsandservices.Theproductionofgoodsor
servicesforselfconsumptionisnotbusiness.

UTILITYCREATION:

Businessactivitiesresultsincreationofutilities.ItcreatesFORMUTILITY,TIME
UTILITY,PLACEUTILTY.

CHARACTERISTICS OF BUSINESS
PROFITEARNING:

Themainfunctionofbusinessisearningprofit.Iftheprofitmotiveismissingin
atransaction,thenitcannotbeconsideredasbusinesstransaction.

UNCERTAINTYOFRETURN:

Businessdoesnotguaranteeforthereturnofeitherprincipalamountinvolved
inthebusinessortheprofit.

ELEMENTOFRISK:

Anotherimportantfeatureofbusinessisthepresenceofriskfactorinthe
transaction.BusinessisalwaysexposedtocertainrisklikeNATURALRISK,
HUMANRISK,ECONOMICRISK,PHYSICALRISK.