Understanding Economic Stages, Activities, and Factors
Economic Stages
- Hunting and Fishing: Humans are limited to taking what nature directly provides.
- Farming: Humans cease being nomadic and become sedentary.
- Agriculture: The working environment is the earth.
- Agriculture with Industry: Agriculture evolves with the introduction of industrial practices.
- Industry and Contemporary Economy: Modern economic systems dominated by industry.
Economic Activity
Economic activity is the set of actions undertaken to satisfy human needs with appropriate external material resources, which are limited and open to alternative uses. Economics is the science that deals with the utilization of scarce resources, capable of alternative uses for goods and services, in order to make an equitable distribution among people in society.
Meaning of Economy
Economy is a science—an empirical science, a social science, and not an exact science. It can be divided for the purpose of knowledge by order or mode of knowledge.
Other Sciences Related to Economy
Philosophy, history, law, technology, geography, anthropology, sociology, psychology, statistics, and mathematics.
Microeconomics
Microeconomics is the part of economic science that deals with the basic economic unit: the individual, family, and business.
Macroeconomics
Macroeconomics is the part of economic science that studies overall economic activity. It addresses individual natural needs and societal needs, including private, collective, and public needs.
Maslow’s Hierarchy of Needs
Maslow’s hierarchy includes self-actualization, self-esteem, social needs, safety needs, and physiological needs.
Free Goods
Free goods are not owned by anyone and are generally inappropriate for economic consideration.
Economic Goods
Economic goods are appropriable and meet economic needs.
Consumer Goods
Consumer goods can be categorized as investment goods, single-use goods, public goods, private goods, complementary goods, and alternative goods.
Opportunity Cost
Opportunity cost is the amount of other goods that must cease production to produce the first good.
Production Factors
The primary production factors are land, labor, and capital.
Work
Work is the factor that contributes to productive economic activity through the combined physical, manual, or intellectual efforts of individuals to achieve wealth.
Modalities of Land
Land can be arable, developable, used for forestry and livestock, used in mining, quarrying, and raw materials extraction, or be unproductive. Salaries are the price of labor.
Classes of Work
Work can be intellectual, physical, managerial, research-oriented, execution-based, monitoring-related, or supplementary.
Fixed Capital
Fixed capital consists of durable means of production.
Capital Assets
Capital assets are formed by means of non-renewable production.
Financial Capital
Financial capital consists of all sources of financing.
Human Capital
Human capital is the set of workers in a company or partnership.
Consumption
Consumption is the production of goods and services that the community needs for its survival, not to mediate exchange with other individuals or groups producing.
Company Components
A company consists of:
The Entrepreneur
The entrepreneur is the natural or legal person who takes responsibility for business management.
Workers
Workers are the human factor that lends their work in exchange for a wage.
Capital
Capital is a set of goods used to produce other goods.
Company Purpose
The objectives of a company are determined by the economic and social system.
Election of Economic Activity
It is the productive activity that will develop and through which the proposed purpose is fulfilled.
Company Sectors
Companies are economic units of production. The public sector includes all activities directly or indirectly controlled by public authorities.
Foreign Sector
The foreign sector covers all economic transactions of goods, services, or capital between one country and abroad.