1. Unit 4
Economic activities

2. Economic activity definition
Tasks undertaken by people in order to obtain the goods required to meet their needs
Material goods
Food
Housing
Clothing
Appliances
Services
Education
Health
Tourism
Trade

3. COMPONENTS OF THE ECONOMIC ACTIVITY
Production
Distribution
Consumption

4. COMPONENTS OF THE ECONOMIC ACTIVITY
PRODUCTION: The processes and methods used to transform tangible inputs (raw materials, semi-finished goods) and intangible inputs (ideas, information, knowledge) into material goods or services.

5. COMPONENTS OF THE ECONOMIC ACTIVITY
DISTRIBUTION: transfer of products to consumers (in a market or anywhere producers and consumers meet)

6. COMPONENTS OF THE ECONOMIC ACTIVITY
CONSUMPTION: use of the goods that have been produced and distributed

7. Sectors of economic activity
Primary sector: extraction of natural resources for production, distribution and consumption. Agriculture, farming, mining, forestry, fishing

8. Sectors of economic activity
Secondary sector: Transformation of natural resources. Industry, construction

9. Sectors of economic activity
Tertiary sector: provision of services such as education, health, or tourism

10. Sectors of economic activity
Quaternary sector: knowledge-based part of the economic activities such as information technologies, media, research, consultation

11. Economic sectors in spain

12. Economic agents
Subjects that perform the necessary activities in order to transform resources, capital and labor and produce goods and services
They are:
Businesses
Households: Families and individuals
The State
They exchange labor and goods for money
The economic circuit

13. Economic agents: BUSINESSES
Actors that produce, distribute and sell goods to consumers in order to obtain an economic profit. Basic production units. They participate in all the economic sectors.

14. Economic agents: BUSINESSES
They can be classified:
According to their size: small (up to 50 employees) medium (up to 250 employees), large (more than 250)
Depending on capital ownership: public, private or mixed
For their organization:
belonging to individuals or groups
Public licensed companies (sociedades anónimas): capital divided into shares
Limited companies: capital provided by several partners
Cooperatives: collectively managed by partners

15. Economic agents: HOUSEHOLDS
Private actors that constitute the basic units of consumption, but that also sell their labor to businesses and the State in order to obtain a salary. This salary in turn allows them to buy goods from businesses and the State.

16. Economic agents: the state
Unit both of production and of consumption
Produces and provides businesses and families with goods and public services that society needs: infrastructures, funding, pensions, unemployment benefits, etc.
Consumes goods and services provided by private businesses
Employs public employees
Makes the laws
Its aim is to provide welfare. It has to levy taxes from families and businesses in order to do so.

17. FACTORS OF PRODUCTION
Factors of production are the different types of resources that are used in order to produce goods and services.
Economic agents
Factors of production
Goods and services

18. FACTORS OF PRODUCTION
Classical economic theories considered three factors:
Natural resources
Labor
Capital

19. FACTORS OF PRODUCTION
More recently, some authors have added a fourth factor, although they don’t agree on which it is: entrepreneurship, technology…

20. FACTORS OF PRODUCTION
Natural resources: elements found in nature that have an economic use: water, light, plants, animals, minerals, etc. They can be used directly or transformed, and include:
Raw materials that will be transformed into semi-finished or finished products.
Energy sources

21. FACTORS OF PRODUCTION Natural resources can be:
Renewable: if they cannot be used up or they can be renewed after a short period of time. Examples: wind power, hydroelectric power, solar energy.
Non-renewable: if they can be exhausted or require very long periods of time to renew. Examples: coal, oil, natural gas, uranium.

22. Factors of production
Capital is the combination of the non-natural resources or means of production. It includes:
Physical capital: material elements like facilities and machinery
Financial capital: money and credit
Human capital: productive capacity, conditioned by training and experience

23. FACTORS OF PRODUCTION
Labor is the human effort involved in the elaboration of products or the provision of services

24. Labor problems FACTORS OF PRODUCTION Unemployment Working conditions
Child labor
Discrimination
Safety

25. Economic systems CAPITALIST The Market Law of supply and demand
REGULATED BY
DETERMINED BY
OTHER PRINCIPLES
GOAL
CAPITALIST
The Market
Law of supply and demand
Private property
Free circulation of goods and individuals
Individual profit
SOCIALIST (China, Cuba, Vietnam, Laos, North Corea)
The State
Planning
State ownership of companies and means of production
Achievement of social equality
WELFARE STATE (Europe)
Both
Public companies
Redistribution
Economic freedom, but safeguarding the access of all citizens to their basic needs

26. WORLDWIDE ECONOMIC AREAS
Triad
United States & Canada EU
Japan
Emerging powers
BRICS
Other
Underdeveloped areas

27. WORLDWIDE ECONOMIC AREAS
Triad (Canada &USA, EU, Japan):
Three centers of power that dominate the global economy:
80% of global trade
70% of global production, mostly high-tech products
90% of financial transactions
80% of new scientific knowledge (thanks to big investments)
75% of world income: high living standards
High consumption
Main promoters of globalization and internationalization

28. WORLDWIDE ECONOMIC AREAS
Emerging powers:
The main emerging economies are the BRICS: Brazil, Russia, India, China and South Africa
We can distinguish historically underdeveloped countries from historical economical powers or important countries at a regional level
Historically underdeveloped: low salaries have allowed for rapid industrialization but domestic consumption is low
Historical economic powers rely on exporting their abundant raw materials (mostly minerals and energy). Class-specific patterns of consumption (significant social differences)

29. WORLDWIDE ECONOMIC AREAS
Underdeveloped areas:
Some countries in Latin-Amaerica, Asia and Sub- Saharan Africa
Economies based on the primary sector, especially agriculture
The secondary sector is weak
Low standards of living: low consumption
Little participation in international markets