Basic Economic Activies — Flashcards

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Production, consumption, and capital formation are the three basic economic activities of an economy. Production creates goods and services, consumption uses them to satisfy wants, and capital formati…

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Production is defined as creation of utility. It means using scarce resources to make goods and services that satisfy human wants.

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Land, labour, capital, and entrepreneurship are the factors of production. These are combined to produce goods and services, and each factor receives a payment for its productive service.

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Land is a gift of nature and a natural resource. It includes plain regions, mountains, and plateau regions. It is not mobile, and the owner of land is paid rent.

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Mountains ensure the flow of rivers into the plain region and provide facilities for tourism. Plateau regions possess reserves of minerals, fossil fuels, and forests. These natural features support di…

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Labour means human effort through physical and mental exertion in the production of goods and services. People who provide labour are known as human resources, and the income received for labour is wa…

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Loading, unloading, and ploughing are purely physical labour because they depend mainly on bodily effort and do not require special skill. They are examples of unskilled labour.

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A person must acquire skill through education and training. These occupations require trained labour, which increases the productivity of the worker and the economy.