Economic activity

• What is the purpose of economic activity?

  • The central purpose of economic activity is the production of goods and services to satisfy needs and wants
  • Needs are essential for survival, eg. food and shelter
  • Wants are desires for goods and services that are not essential, eg. electronics 
• What is the central economic problem?

  • The demand for needs and wants are infinite, while the supply of resources needed to produce them is finite
• If total revenue is more than total cost?

  profit
• If total revenue is less than total cost?

  loss