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 Activities Primary 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 Agents Citizens, 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.
Companies Companies 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 .
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.