HomeIndustriesEconomic Activity | Definition, Type, Actors, Characteristics, Goals

Economic Activity | Definition, Type, Actors, Characteristics, Goals

Economic activity occurs when resources such as capital goods, labor, manufacturing techniques, or intermediate products are combined to produce specific goods or services. Thus, economic activity is defined by its resource inputs, manufacturing processes, and product outputs (goods or services). To simplify your business activities, you can integrate the purchasing system in the procurement of goods and services to manage each purchase submission from each branch and get the best offers from suppliers. With our products, procurement cost control becomes more efficient!

warehouse management

Table of Content

Type of economic activity


1. Production

The purpose of production is to meet market demands. The resulting goods and services can be sold in the market or made available by the government to the public for a nominal fee. Production activities involve the manufacture of goods and services. Producers are the people who made the product or services. Producers combine factors of production such as labor, capital, entrepreneurship, and raw materials to convert them into various goods and services.

2. Consumption

It is an activity that consumes the utility (use-value) of goods and services used to fulfill people’s wants or needs. The purpose of production is to produce goods and services for consumption.

3. Distribution

Described as the movement of goods from the manufacturing system to the market and finally in the hands of consumers. Distribution is essential for any industry or service. Distribution management includes more than just moving products from point A to point B. It also involves receiving, storing, processing orders, billing, selling, delivery to customers/branches, returns/exchanges, and promoting goods.

Who are the economic actors?

Economic actors consist of individuals, businesses, and governments who act by maximizing their respective interests. For example, individuals will maximize satisfaction (utility) in consuming goods and services. Similarly, businesses seek to maximize profits in producing goods and services. A person or unit that can use land, labor, or capital. Economic actors can be individuals, companies, governments, or even society as a whole.

The following are the roles of economic actors in economic activities, which are divided into four categories:

Consumer household

Consumers have a crucial role, and without them, economic activity cannot function because the entire production process takes place with consumers in mind. Almost everyone in society is a consumer to some degree. The economic activity carried out by consumer households is to pay to consume goods and services produced by producers.

Household manufacturer

Producers make goods and services sold in the economy by using and combining production (land, labor, capital, and technology). They also provide jobs for people who make products or who provide services.

Some of the roles of producers are supplying various goods and services in the market according to consumer demand. If the number of producers increases, the total supply of goods and services will also increase. In addition, this party is the entrepreneur and the main person in charge of all production factors such as land, labor, capital to allocate them for the smooth running of business activities.

Government household

Economic actors who play a role in regulating economic activities in a country are called government households. The government consists of institutions tasked with holding and issuing policies to influence economic activity. They include the central government, ministries, central banks, and local governments. The government also carries out various economic activities in some sectors, especially those less attractive to the private sector (business). Examples are infrastructure development, defense, health and education services, and rail transport.

Overseas household

As actors, foreign people also have a stake in the economy of other countries. Economic activities carried out with foreign household economic actors are:

Trade between countries such as export and import activities

  • Human resources, both people from abroad who act as workers or groups of people who need workers
  • Investing in several business entities.
  • lender
  • Assisting, for example, during a disaster

Characteristics of economic activity

1. Satisfy 

The primary purpose of economic activity is to meet human needs. The need that needs fulfillment may be in the present or future. When a person does work to earn money and buy necessities for his family, it will satisfy current needs. On the other hand, when a person saves money from his current income to meet his needs after retirement, it will be a plan for the future.

2. Making a profit

All economic activities, which may be related to business, profession, or services, help earn income. People carry out these activities to fulfill their needs with the help of funds obtained through economic activities.

3. Play a role in the development

Economic activities not only satisfy human wants but also become the basis for the economic development of society. When old needs are satisfied, new markets emerge. Financial resources are used to produce new products, and this process helps generate jobs and, ultimately, income. Social development is related to the economic activities carried out there.


Economic resources are limited, and needs are many. It is essential to make a wise allocation of resources to meet maximum needs. Everyone assesses his needs and resources. He determines his priorities for applying his resources. Some conditions are urgent, while others may wait a while. An effort to achieve the maximum satisfaction from the available resources is mandatory. Proper allocation of resources will ensure their best use.

In addition, the full utilization of resources is important. Various factors of production such as land, labor capital, etc. must be used to produce goods so that no part is left idle. For example, if a set of factors of production can make a certain number of units, then production must not be less than that amount; otherwise, the utilization of the source will not be maximum.

Also read: Overcoming Economic Downturn for Companies


Each actor plays an important role in the smooth operation of economic activity. This activity cannot take place optimally unless one of the actors participates. As a result, we cannot disregard their respective roles. In today’s world, every company must have a strategy in place to manage every aspect of production, particularly those dealing with purchasing raw materials from suppliers in a more intelligent, timely, and effective manner. Based on the most comprehensive web-based No.1 Sales application for Enterprise, you can use HashMicro’s purchasing system to increase the productivity of your production team.

Interest in getting savvy tips for improving your business efficiency?

Anatha Ginting
Anatha Ginting
A full-time Content Writer at HashMicro. Strive to develop my writing skill and knowledge in terms of business, technology, and other relevant issues.


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