Economic activities

Economic activities

1. Human needs and production

   • Primary need
     • Housing
     • Food
   • Secondary need
     • Mobile phones
     • Relationship with other people
   • To meet human material needs through the production of goods and services
   • Classification of the main economic activities
     • Production
       • Creation of goods and services
     • Distribution
       • Involves transporting goods from the producer to the consumer
     • Consumption
       • Is based on using the goods and services produced.

2. Factors of production

   • Definition
     • The resources involved in producing goods and service
   • Natural resources
     • They can be regenerated in different ways
     • Are raw materials, which are provided by nature
     • Renewable resources
       • Can be consumed without being exhausted, because they are renewed faster than they are consumed.
       • They can be virtually inexhaustible
         • Water
         • Wind
       • They may need a period of time to regenerate
         • Flora
         • Fauna
     • Non-renewable resources
       • They are renewed more slowly than they are consumed, and their capacity for regeneration is very low
         • Iron ore
         • Oil
   • Capital
     • Human capital
       • The labour that workers contribute
     • Physical capital
       • Raw materials, facilities, tools and machinery
     • Financial capital
       • The money needed to acquire physical capital and pay human capital
   • Labour
     • Physical
     • Intellectual
     • Role
       • To produce goods or provide services in exchange for financial compensation
     • A wage or salary is the payment which employees receive for their labour

3. Economic agents

   • Households
     • Supply labour by working
     • Use goods and services
     • Supply financing through spending
     • Supply financing through taxes
     • Recieve wages and salaries
   • Businesses
     • Produce goods and services
     • Employ labour
     • Provide payment for work
     • Supply financing throug taxes
     • Are financed by the spending of the other two agents
   • Government
     • Produce and use goods and services
     • Employs labour
     • Supplies financing through wages and salaries, pensions,…
     • Supplies financing through aid and subsidies
     • Collect taxes

4. Economic systems

   • Basic economic issues
     • What to produce
     • How to produce it
     • For whom
   • Tradition-based economic systems
     • Based on
       • Beliefs
       • Customs
       • Laws
     • Example
       • Feudal Europe
         • Artisans in cities formed guilds
           • These organisations regulated and established rules of production of production for each trade
     • Livestock farming wasnvery important and most of the pastureland was owner by the municipalities or town councils of the time.
       • It was known as common pasture
         • The municipality´s residents were responsible for managing the land.
   • Capitalism and the free market system
     • Factors of a socioeconomic system of the capitalism
       • Private ownership
         • Physical capital
         • Financial capital
       • Investment of capital
       • Free market
         • Regulates
           • The production of goods and services
           • The sale of goods and services
     • Supply
       • The products available on the market for a specific price and during a certain period
     • Demand
       • The goods or services that consumers are prepared to buy for a particular price an under certain conditions.
     • Two conflicting scenarios
       • Prices increase
         • If demand is greater than supply
           • There is a shortage of products
       • Prices decrease
         • If supply is very high and demand is low
           • A surplus is created and prices decrease
   • Auhority
     • Decisions are made by an authority, generally represented by State
     • Social equality
       • Ultimate aims in these economies
       • To achieve greater social equality
     • The state
       • Makes a number of forecast
       • Determines what to produce
     • North Korea
   • Mixed
     • Aim
       • Is to avoid both
         • The negative effects of the unequeal distribution of wealth in a free market
         • The lack of efficiency that characterises authority –based systems
     • Taxes
       • Investing in public good and services
       • Social security and benefits
       • Other kind of support
     • Nordic countries

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