Economic & Non-Economic Activities- Introduction to Business Economics, Business Economics & Finance Notes | Study Business Economics & Finance - B Com

B Com: Economic & Non-Economic Activities- Introduction to Business Economics, Business Economics & Finance Notes | Study Business Economics & Finance - B Com

The document Economic & Non-Economic Activities- Introduction to Business Economics, Business Economics & Finance Notes | Study Business Economics & Finance - B Com is a part of the B Com Course Business Economics & Finance.
All you need of B Com at this link: B Com

Definition of Economic Activities

Economics activities are those activities which are associated with the production, exchange, distribution, and consumption of merchandise, at every level of the society. These activities are performed with the sole aim of earning money and producing wealth, to satisfy human wants, with limited resources. These activities form a basis for the economic development of the country as it adds value to the gross domestic product.

Economic activities are classified as business, profession and employment. Business is an activity which involves production and distribution of goods and services, for profit. The profession is related to the services provided by profession for monetary compensation called fee. Employment refers to an occupation in which a person works for another person for salary or wages.


Definition of Non-Economic Activities

Non-economic activities refer to a human activity undertaken sheerly out of love, affection, sympathy or patriotism. These activities are conducted voluntarily with an aim of rendering services to others for free, i.e. it cannot be measured in terms of money. It includes all those activities which are performed for the satisfaction of human sentiments that can be social, religious, cultural, personal, recreational, charity, patriotic.


Key Differences Between Economic and Non-Economic Activities

The difference between economic and non-economic activities can be drawn clearly on the following grounds:

  1. An activity related to production and consumption of goods and services for economic gain is known as economic activities. An activity performed gladly, with the aim of providing services without any regard to monetary gain is known as the non-economic activity.
  2. Economic activities are performed for economic motive, i.e. earning profit. On the other hand, non-economic activities are performed due to social or psychological reasons, i.e. out of love, affection etc.
  3. The measurement of economic activities is in monetary terms, whereas non-economic activities lack money measurement.
  4. Economic activities have a pragmatic approach, in essence, it deals with things in a practical way. As against this, non-economic activities have an idealistic approach wherein more importance is given to human values instead of money.
  5. Economic activities result in creation and accumulation of wealth as they are done to earn profit. Unlike non-economic activities which result in mental satisfaction and happiness.
  6. Economic activities are very important for the economy as they add value to the country’s gross domestic product (GDP). As opposed to non-economic activities, which have no influence over country’s national income.

Comparison Chart

BASIS FOR COMPARISON

ECONOMIC ACTIVITY

NON-ECONOMIC ACTIVITY

Meaning

Economic activity refers to a human activity related to production and consumption of goods and services for economic gain.

Non-economic activity is an activity performed gladly, with the aim of providing services to others without any regard to monetary gain.

Motive

Economic, i.e. to earn money.

Social or psychological, i.e. out of love, affection, etc.

Money measurement

Measured in monetary terms.

Lacks money measurement.

Approach

Pragmatic

Idealistic

Results in

Creation of wealth and assets.

Satisfaction and happiness.

National Income

Adds value to national income.

Does not affects national income.


Conclusion

With the above discussion, it is quite clear that the only aspect which distinguishes these two activities is the objective. The same activity can be economic and non-economic at the same time, you can understand this with an example, Suppose a father is taking his child to school by Van, this is a non-economic activity, as he drops his son out of affection and care, but if there are five other children apart from his son going in the Van who pays money for conveyance to him, then that is an economic activity, as the person is getting money for that service.

So, when a person is providing services out of love or affection, that is non-economic but when that person charges money for providing such service, it is called economic activity.

The document Economic & Non-Economic Activities- Introduction to Business Economics, Business Economics & Finance Notes | Study Business Economics & Finance - B Com is a part of the B Com Course Business Economics & Finance.
All you need of B Com at this link: B Com

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