Economic and Non Economic Activities

Chapter- 1
Business, Trade & Commerce
ECONOMIC AND NON ECONOMIC ACTIVITIES

All Human beings have different types of needs. So, in order
to fulfill those needs they have to perform some or the other
activity. Human activities are classified into Economic & non-
economic activities.
Basic
Economic Non-Economic
Meaning
Those activities whose Those activities whose aim is not to earn money,
Purpose/
Objective is to earn but to satisfy social, psychological and emotional
Notice
money and to create wealth. needs. For example love, sympathy, patriotism.
People work in factories

Cooking food in restaurant. A housewife cooking food for her family. A
Examples
A teacher teaching in a teacher training his daughter at home.
school.
Concept of Business: – Business refers to those economic

activities involving the purchase production and / or sale of
goods and services with a motive of earning profit by
satisfying human needs in society.
Characteristics of Business:
1. An economic activity: Business in considered as an
economic activity because it is undertaken with the objective
of earning money.
2. Production or procurement of goods and
services: Business includes all the activities concerned with
the production or procurement of goods & services for sales.
Services include transportation, banking, Insurance etc. Goods
may consist of consumable items.
3. Sale or exchange of goods & services – There should be
sale or exchange of goods and service between the seller &
the buyer.
4. Dealing in goods & services at a regular basis: There
should be regularity of dealings or exchange of goods &
services. One single transaction of sale or purchase does not
constitute business.
5. Profit Earning: The main purpose of business is to earn
profit. A business cannot survive without making profits.
6. Uncertainty of return: Every business invests money with
the objective of earning profit but the amount of profit
earned may vary. Also there is always a possibility of losses.
7. Element of risk: All business activities carry some
elements of risk because future is uncertain and business has
no control over several factors like, strikes, fire, theft, and
change in consumer taste etc.
Business: Refers to Purchase, production and/ or sale of
goods & services with the objective of earning profit.
Profession: Includes those activities which require special
knowledge & skills in the occupation.
Employment: Refers to the occupation in which people work
for others and get remuneration in return.
Basis of
Business Profession Employment
Destruction
Starts after completing Membership of a professional

Mode of Start after getting
some legal formalities if body and certificate of
establishment appointment letter.
needed. practice required.
Provision of goods Work allotted by the

Personalized services of
Nature of work and service to the public. employer according to the
expert nature.
contract.
No minimum qualification Professional Qualification and Qualification and training as

Qualification
is necessary. training required. prescribed by the employer.
Capital Capital needed according Limited capital for

No capital required.
investment to its size and capacity. established
Reward/
Profits Professional fee Salary or wages
Returns
Risk High Risk Low Risk No Risk
The terms and conditions of

Code of Conduct No code of conduct Professional code of conduct services contract are to be
allowed.
Answer the following questions:

1. What are the different types of economic activities?
2. Name one economic pursuit, in which expertise is required.
3. Categorise the occupation in which the employees work for others and get paid in return.
 Profession
 Business
 Employment
 None of the above
4. Sort the following into a business concern, employment and profession.
 Farmer
 Clerk
 Lawyer
 Doctor
5. What is the reward that a businessman earns for bearing risk?
6. What is the difference between Business and Profession?
7. What are the objectives of the business?
8. Differentiate between Economic and Non-economic activities.
9. Explain the term ‘Employment’ and give its distinctive features.

Economic and Non Economic Activities

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Economic and Non Economic Activities

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Chapter- 1

Business, Trade & Commerce

ECONOMIC AND NON ECONOMIC ACTIVITIES

People work in factories

Concept of Business: – Business refers to those economic

Starts after completing Membership of a professional

Provision of goods Work allotted by the

No minimum qualification Professional Qualification and Qualification and training as

Capital Capital needed according Limited capital for

Risk High Risk Low Risk No Risk

The terms and conditions of

Answer the following questions:

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