How Economic Activity Works: Concepts, Distribution, and Consumption

Arable farming

Concept of the economic activity: Jobs done by people to satisfy society's needs and for wealth.

• Production
  • Types of goods depending on production
  • Intermediate goods
  • Provision of services
• Delivery and state of goods and services

Distribution

• Two steps in sale:
• Wholesale
• Retail

Consume

Concept: Use of a good or service to satisfy your own needs.

• Two types of goods depending on consumption:
• Durable
• Non-durable

Factors Affecting Production

• Human capital: Employees and business men
• Capital
  • Physical capital: Machinery, furniture, and raw materials
  • Financial capital: Money necessary to begin production
• Resources used to produce goods and services

The Market Economy

Number of products available depends on:

• Inflation
  • What causes it?
  • General rise of prices in goods and services in a country

The Economic System

1. Capitalism / Capitalist system / Market economy

It is based on:

• Free market: price is decided by supply and demand

Subsistence economy: People have to meet their own needs and there is no surplus

Planned economy: There is no private property, so the state owns the means of production

A Global System

What is it? A phenomenon that began in the second half of the 20th century and is based on:

1. Multiculturalism: Thanks to the absence of immigration restrictions
2. Free trade: Eliminating trade limitations resulting in economic independence

Globalization

The process by which businesses or other organizations develop on an international scale.

Consequences: This has led to the creation of international organizations that can mobilize members worldwide.