Types of Economic Activities – In everyday life the economy cannot be avoided by all people, from buying staple foods, buying clothes, buying stationery for school, buying school uniforms, and so on. In other words, to meet the needs of every human being is always related to economic activity.
Economic activities must be carried out by all members of society, from ordinary people to the government. In fact, economic activity must be properly maintained so that the wheels of the economy continue to turn. The wheels of the economy that keep turning properly can improve people’s welfare.
What is economic activity? Sinaumed’s, we need to recognize economic activities so that we can play a role in maintaining the wheels of the country’s economy. Consider the following explanation of economic activity.
Definition of Economic Activity
Whether we are aware of it or not, every activity we carry out is always related to economic activity. Activities from waking up in the morning, then continuing to work or study activities, then sleeping at night are all activities included in economic activity, why is that? This is because every human being in order to survive requires various kinds of needs that must be met.
The needs of human life are very diverse, ranging from food, work clothes or play clothes, fuel for transportation, to shelter. In fulfilling all the necessities of life, buying and selling transactions are needed between traders and buyers. It is from these transactions that economic activity can occur.
Every human life needs are different, so the economic activities carried out are also different. In other words, every human being carries out economic activities with different goals and is adapted to the needs of his life.
Therefore, economic activity is an activity carried out by humans to meet their needs.
Meanwhile, economic activities based on the Business Dictionary are actions that involve the production, distribution, and consumption of goods and services at all levels of society.
So, it can be said that economic activity does not only concern individuals, but involves many things including maintaining the wheels of the economy. Therefore, it should be that people who carry out economic activities must take care of each other so that every member of society can live more prosperously.
Economic Activity Actors
In carrying out economic activities certainly requires actors. Without actors, economic activity will not run optimally.
1. Family household
Types of Economic Activity
In people’s lives, economic activities have several types, namely consumption economic activities, production economic activities, and distribution economic activities.
1. Consumption Economic Activities
In the Big Indonesian Dictionary (KBBI) consumption is the use of production goods (clothing, food, and so on). Consumption economic activity is an activity in which we are using or using a product or service that has been produced by the producer. In this case, goods or services that are used by every human being to fulfill their needs and every human being will be referred to as a buyer or consumer.
Everyone’s life needs will usually always be the same. Therefore, a consumer will consume his goods repeatedly, unless there is a new need for life. For example, housing, clothing (office, school, home), food and drink, school books, and others.
The thing that needs to be underlined in consumption economic activities is that a consumer does not necessarily become a producer, but a producer can be sure that he is a consumer. This is because a producer will become a consumer when buying the main ingredients of the production process. For example, tofu producers will buy the best soybeans so that the tofu they produce is good too.
The greater the level of consumption in a society, it can indicate that the community is experiencing prosperity or well-being.
Factors Affecting Consumption Activities
Basically, every human being when carrying out consumption activities is very much adjusted to the needs of his life, so the consumption activities of one consumer and other consumers are also different.
In addition, there are several factors that can affect a person’s consumption level, namely income, prices, habits, tastes, and substitutes.
Income is a result of work that is obtained through work or tasks that have been completed. This income can be in the form of wages (employees), rent (shops or houses that are rented or rented), and profits (businessmen who make a profit).
When viewed from its shape, the income received by each person is different, so that each person’s consumption activities will also vary. For example, the needs of an entrepreneur will be different from those of an employee.
It is no stranger if the price factor greatly influences consumption activities. In fact, for some people, when buying something, they need to look at the price factor. In addition, the price factor can determine the target market for a production of goods or services.
An item or service that experiences an increase in price can cause a demand from consumers to decrease. Meanwhile, an item or service that experiences a decrease in price can increase demand from consumers. For example, when the price of soybeans increases, the price of tofu and tempeh will also increase, but buyers of tofu and tempeh will decrease.
Therefore, when a production experiences a decrease in price, consumption should be increased. Meanwhile, when prices rise, consumption needs to be reduced.
A person’s living habits can be influenced by many factors, starting from lifestyle, the surrounding environment, and their living needs. It can be said that this living habit can affect different levels of consumption. For example the habit of frugal living and extravagant living habits.
Someone who has the habit of living extravagantly will increase consumption activities. Whereas someone with a frugal living habit, consumption activities are stable or even tend to be low.
Individual tastes from one individual to another are different. These different tastes are usually caused by a person’s psychological factors that can change at any time. Everyone’s taste will affect the level of consumption. For example someone who has a hobby of reading books will always try to find new interesting books.
So, it can be concluded that one’s tastes will determine whether the level of consumption is higher or lower, especially with regard to goods and services. The higher the individual’s taste for something, the level of consumption will increase. Meanwhile, the lower the individual’s appetite for something, the lower the level of consumption.
e. Substitute Goods
It is not uncommon if there is an increase in the price of an item, then someone will replace it with a cheaper item. The occurrence of things like this is because someone will consume goods according to their income.
The existence of these substitute goods will affect the level of consumption of an item. In short, the more people use substitute goods, the less the amount of consumption of substituted goods.
2. Production Economic Activities
According to the Big Indonesian Dictionary, production is the process of producing, producing, or producing an item. Therefore, production can be interpreted as an activity that can improve an economy by making production results so that the needs of human life can be fulfilled.
In carrying out production economic activities, it definitely requires sacrifice in the form of spending funds in order to produce or create quality goods or services. Quality goods or services can attract the attention of consumers to buy these goods or services.
Meanwhile, in production economic activities there is such a thing as a producer. Producers are usually addressed to people, business entities, or organizations that can create goods or services that can be used by consumers.
If you are able to produce your own production, either goods or services, then you can be said to be a producer. For example, there is someone who can produce bread which is then sold to his friends.
Factors Affecting Production Levels
Production economic activity cannot be separated from the so-called factors of production. Production factors can affect the ups and downs of production levels, such as human resources, natural resources, and capital resources.
a. Human Resources
In producing goods or services, it cannot be separated from what is called human labor. Human labor is human activity related to the production process in order to create quality goods or services. Therefore, in producing goods or services, it is better to use quality human resources.
Based on its quality, human resources can be grouped into three, namely:
1). Educated workforce ( skilled labor )
Educated workers are workers who gain knowledge or expertise through formal or non-formal education. For example psychologists, doctors, accountants, lawyers, researchers, and teachers.
2). Trained workforce _
Trained workers are workers who gain knowledge or expertise from the results of training and experience while working. For example drivers, technicians, cooks, mechanics, and others.
3). Uneducated and untrained labor ( unskilled and untrained labor )
Uneducated and untrained workers are workers who only rely on their physical abilities and spiritual strength. For example porters, sweepers, farm laborers, scavengers, and others.
b. Natural resources
It cannot be denied that natural resources are natural factors that can be used to meet the needs of human life and become a factor of economic production activities. In other words, good and quality natural conditions will produce a good and quality product as well.
Many goods have been produced from natural resources, from hands, air, water, to mining products. All of these natural resources can improve the community’s economy, but on the other hand they can damage natural conditions. So, we must be wise in using natural resources.
1). Soil natural resources
Soil natural resources are usually used for agriculture, plantations, factory buildings, residences, and road construction. From the natural resources of the land will produce products, such as potatoes, rice, fruits, housing, highways, and so on.
2). Air resources
Air natural resources are closely related to aviation, especially when reading wind direction. Meanwhile, in agriculture, air natural resources are very useful for adjusting what plants are suitable for planting in an area.
3). Water natural resources
Water natural resources are often used to produce a production, such as transportation, irrigation, and electric power. Electric power from water natural resources is very beneficial for people’s lives, especially people who have not received electricity supply.
4). Capital Resources
In increasing the amount of production and improving the quality of production, capital is always needed. Therefore, capital becomes a factor of production activities. For example a farmer who needs hoes, fertilizers, and seeds to produce a product. In the production process, capital can be in the form of equipment and materials.
Based on its use, capital is divided into two, namely current capital and fixed capital. Current capital is capital in the form of goods that can be used for more than one production. For example land, factory machinery, buildings, and others.
Meanwhile, current capital is capital in the form of goods that can only be used once in a production process. For example fuel oil.
Based on its form, capital is divided into two, namely concrete capital and abstract capital. Concrete capital is capital that is visible when carrying out production. Examples include machines, buildings, and raw materials. Meanwhile, abstract capital is capital that is not visible during production. Examples include knowledge, skills, product brands, and knowledge.
5). Entrepreneur Resources
Entrepreneur resources can be said as entrepreneurship. Factors of production originating from entrepreneurship in the form of someone who is already an expert in compiling cooperation between natural production, capital and labor. In short, an entrepreneur is someone who has been able to control all factors of production economic activity, especially in increasing the quantity and quality of products.
3. Distribution Economic Activities
In the Big Indonesian Dictionary, distribution means distribution, distribution, or delivery of daily needs to several people or places. In short, distribution is an activity that aims to distribute goods or services from producers to consumers.
Distribution economic activities are usually carried out by institutions or individuals depending on the needs of each producer. Institutions or individuals who carry out distribution activities are known as distributors.
Usually the distribution activities carried out by distributors are very diverse, such as trading, transportation, and storage.
Factors Affecting the Level of Distribution
a. market factor
Market factors greatly affect distribution channels, especially those caused by consumer buying patterns.
b. goods factor
The goods factor is very considerate in terms of the goods which are seen based on the size and weight of the goods, the standard of the goods, the units of goods, whether the goods are easily damaged or not, and the way the goods are packaged.
c. company factor
The company factor really considers various things, such as sources of funds, services provided, and company management in managing the company.
d. Habit factor in making purchases
This habit factor really takes into account the financing of goods delivery, sales volume, and manufacturer’s discretion.
Purpose of Economic Activity
1. Consumption Economic Activities
There are several objectives contained in consumption economic activities, namely:
1. Give satisfaction to yourself
2. Expend use value on an item gradually
3. Expend the use value of an item at once
2. Production Economic Activities
In carrying out production economic activities, of course there is a goal. The following are the goals of production
1. Produce or create goods or services that are useful to consumers
2. Improving the quality of a product or service
3. Increase the profits of a business so that the company can develop
4. Improving community welfare
5. Can open jobs
3. Distribution Economic Activities
Distribution economic activities have several objectives, including:
1. Distribute goods originating from producers to consumers safely
2. Can meet the needs of society for an item
3. Guarantee the continuity of production
4. Production results can be used by consumers properly
Examples of Economic Activities
1. Economic activities in the plantation sector
Economic activities in the plantation sector are usually related to planting activities. From these activities will produce an item that can be sold to consumers. For example mango orchards, palm groves, and others.
2. Economic activity in agriculture
Economic activity in agriculture in general cannot be separated from the land factor. Good soil conditions will produce good production as well. For example potatoes, carrots, rice, and others.
3. Economic activities in the industrial sector
Economic activities engaged in the industrial sector are usually in the form of business activities carried out by individuals or institutions that process raw materials into finished goods or semi-finished goods. For example a bakery company.
4. Economic activity in the service sector
Economic activities engaged in services are closely related to a service. For example, hospitality, banking, insurance, and transportation services.
Economic activity is very dependent on many things, starting from resources, market conditions, goods conditions, and geographical location. In addition, economic activity will only move if the actors have carried out their functions and roles properly. The most important thing from economic activity is to be able to run the wheels of the economy.