Economic Activities: Production, Marketing, and Consumption
Satisfying Needs Economically
Consumers seek to satisfy their needs with the least expense. The price of products depends on the quantity of goods and demand. When demand increases, prices rise.
What is Economic Activity?
Economic activity encompasses all human actions designed to meet needs. It involves finding the quickest and least expensive way to obtain products and services, given limited resources.
Production, Marketing, and Consumption
Production
Production combines natural resources, technology, and labor to create goods or services for consumption.
- Consumer goods: Meet consumer needs directly.
- Produced goods: Machines and tools used in production.
Marketing
Marketing involves the distribution and sale of products.
- Wholesale: Wholesalers buy large quantities and sell to other traders or companies.
- Retail: Retailers buy smaller quantities from wholesalers and sell to the public.
Factors of Production
The three factors of production are natural resources, labor, and capital.
The Job
Labor refers to all human activity used to produce goods or provide services. Employment in companies or government is common.
Capital and Technology
Capital is necessary to produce goods or services.
Market Economics
The dominant economic system today is the market economy (capitalism). Prices are determined by supply and demand.
Market Operation: Supply and Demand
Market, Sellers, and Buyers
The market is where goods are bought and sold. Sellers seek profit, while buyers seek to satisfy needs.
Law of Supply and Demand
The balance between price and quantity sold fluctuates based on supply and demand.
Other Factors Affecting Prices
Advertising and propaganda can increase demand and prices.
Economic Operators
Economic operators are individuals, groups, or institutions influencing the economy.
Households
Households are primary consumers, using financial resources to purchase goods and services.
Companies
Companies are the main agents of production and distribution. They range from large multinationals to small businesses.
Public Sector (State)
The state uses taxes to fund public administration, promote economic activity, provide public services (education, health, transport), and offer social benefits (pensions, unemployment).
The Labor Market
Job Market
Professionals seek employment in response to labor demand from companies.
Workforce
The economically active population includes all employed persons and those available for work.
Activity by Sex and Sector
Employment varies by sex and economic sector.
Unemployment
Automation and offshoring have led to downsizing and unemployment.
Unions and Employers’ Organizations
Workers have the right to organize into unions and strike. Employers can create business organizations to defend their interests.