Economic activity is directed toward satisfying consumers’ wants. When individuals use income to satisfy their wants, this greater demand for goods and services generates economics activity. Producers, in general, find it profitable to satisfy the demand and it is this profit motive, which encourages producers to employ factors of production. The process is a circular one: economic activity generates wages for the labour resouces used and profits for the producers and owners of capital resources; this income is then spent satisfying more wants and generating more demand and more economic activity.
Economic activity therefore refers to the differing roles of individuals, firms and governments and it refers to such concepts as production, employment, income and expenditure. This is what economics is all about.…
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