Economic Activities and Systems: A Comprehensive Guide
Economic Activities and Goods
Economic activities are those carried out by human beings to obtain goods (products and services) that they require to satisfy their needs.
Economic goods are products and services generated by economic activity.
Sectors of Economic Activity
Economic activities are grouped into three sectors:
Primary Sector
This sector comprises activities that provide resources directly from nature or raw materials, including:
- Agriculture
- Livestock
- Fishing
- Forestry exploitation
- Mining
Improvements in production systems, such as mechanization, fertilizers, and seed selection, have allowed us to obtain more food for a growing population. Agricultural activity shows great contrasts between highly mechanized and commercial operations.
In Spain, these economic activities employ only 4% of the workforce. Livestock and the fishing industry are also very important.
Secondary Sector
This sector includes activities devoted to converting raw materials into manufactured products (industry).
Typical activities in this sector include:
- Industry
- Energy
- Construction
Industry uses robots to perform many activities on the assembly line. Relocation, the movement of industrial activities from developed countries to other countries, is a significant trend.
In Spain, 19% of the workforce is employed in this sector. The use of renewable energies has increased in production processes in recent years.
Tertiary Sector
This sector involves lending services to people.
- It is the most diversified and developed sector in the most advanced countries.
- In Spain, the service sector employs 76% of the workforce.
Activities in this sector include education, healthcare, banking, cultural and recreational services. Tourism is a very important activity in Spain.
Types of Goods and Services
Goods
Goods are tangible things that satisfy human wants and provide utility. For example, a purchase for a consumer.
Types of Goods:
- Economic Goods: Limited, involve price and opportunity cost. There are two types:
- Consumer Goods: Goods sold to people for their own use.
- Capital Goods: Goods used by businesses to make consumer goods and other capital goods (machinery).
- Free Goods: From nature, unlimited, no cost, no price or opportunity cost, essential to humans (sun, water). Some costs may be involved (pollution).
Services
Services are intangible products such as consultancy, education, insurance, medical treatment, and transportation.
Factors of Production
There are four types of factors of production:
- Natural: Air, water, forests, land, etc.
- Human: Mental and physical labor
- Capital: Resources used to produce goods and services
- Entrepreneurship: Ideas and risk-taking
The Economic Problem
The economic problem is the challenge of scarce resources versus unlimited wants.
Scarcity and Choice
Scarcity requires individuals to make choices. These choices involve costs.
Economic Agents
Economic agents, such as individuals and families, companies, and the state, make decisions to solve scarcity.
Economic Sectors
: groups depending onprimary sector, secondary sector and tertiary sector.
4 main types of economic system: market economy(decisions are made through the market economy (supply and demand). No government intervention) , centrally planned system(all the economic decisions are made by the government.The government decides what to produce, how it is to be produced and the way it is to be distributed among the consumers. It involves lot of planning), mixed economy(goods and services are produced in the free-market sector of the economy, but others are produced by the state)and traditional(Little trade, self-sufficient)
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