Classification of

1 Human Activities-
Economic
and Non-Economic

LEARNING OBJECTIVES
After studying this chapter, you should understand:
1.1 Meaning of Human Activities
1.2 Classification of Human Activities
1.3 Economic Activities
1.4 Non-Economic Activities
1.5 Types of Economic Activities
1.6 Distinction between Business, Profession and Employment
Human life is built around work.
Every human being is busy in some activity or
the other throughout the day.
Every person gets up from bed in the morning, brushes
his/her teeth, takes bath and eats breakfast. Then a child goes to School or College to
study. An adult goes to work on the
job and a housewife works at home. In the evening
a person comes back
home, watches television, eats dinner and goes to bed at night. All
these activities in which a
person engages from morning to evening are known as "human
activities.
1.1 MEANING OF HUMAN ACTIVITIES
Human activities mean all those activities which human
beings undertake. Human
activities are undertaken to satisfy human wants. These activities continue
throughout
life because wants are
unending, unlimited and recurring. Some of the human activities
(e.g., working in an office or factory or shop) produce direct economic benefits. Other
human activities (e.g. praying, playing, sleeping)
produce no direct economic benefits.
The main characteristics of human activities are as follows:
()Human activities are those activities which can be undertaken only by human
beings i.e., men women and children. These activities involve human efforts.
(i) Human activities are undertaken to satisfy human wants which are unlimited.
(ii) Human activities continue throughout life.
(iv) Human activities have a very wide range.
(v) Human activities are performed both for earning money as well as for obtaining
personal satisfaction.
3
 ISC COMMERCE FOR
4 ASS X
ACTIVITIES
1.2 CLASSIFICATION OF HUMAN
into two categories.
Al human activities may broadly be classified
Non-cconomic activities
Economic activities, and 2.
of carning moncy and acquiri.
Economic activities are undertaken with the object iring
wealth. These economic
activities result in the production ofeconomic activities
goods and services.
such as
Businesy
Busine
those of a
but it differs from other an
IS an economic activity chartered accountants, cte
like doctors, lawyers,
Cmpioyee, and self employed persons
HUMANACTIVITIES

Non-Economic

Economic Activities
Activities

emotions such as love for the

Non-economic activities inspired by sentiments and
are
1hese activities are not undertaken
tamily. desire to the
help poor and love for the country.
for monetary gain but for one's satisfaction and happiness.

1.3 ECONOMIC ACTIVITIES

(Economic activities refer to all those human activities which are undertaken to eam
activities is
living and thereby satisfy human wants The main object of these to eam
work is used to satisty wants. For
Income and create wealth) The money earned through in his
a teacher teaches in a school or college, a
doctor attends to patients clinic
example,
and a shopkeeper sells goods to his customers. Economic activities are concerned with the
activities create utilities
production, distributionand exchange of goods and services. These
and result in the production of wealth. Economic activities are also called occupations.

1.3.1 Characteristics of economic activities

The main characteristics of economic activities are as follows:
( Economic motive. Economic activities are undertaken to earn money and acquire
wealth. The main motive behind these activities is to make an economic gain.
These activities are performed by human beings for earning livelihood.
) Productive. Economic activities involve production, distribution and exchange
of goods and services for satisfying human wants. These activities are directly
related to creation of wealth.
(tin) Economic resources.Economic activities make use of economic resources such
as land, labour, capital, etc.
(iv) Rational use. Economic activities require proper allocation of scarce resources
so as to obtain maximum output from them. These activities involve optimum
utilisation of land, labour, capital and other factors of production. Welfare of
society can be maximised when best possible use of resources is made.
(v) Economic growth. Economic activities determine the level of economie
development of a country and the standard of living of its citizens.
(v) Legally valid. Human activities performed for economic gain are called economic
activities only when they are lawful. Unlawful activities such as gambling,
 CLASSIFICATION OF HUMAN ACTIVITIES-ECONOMIC AND NON-ECONOMIC 5

blackmarketing, theft, dacoity, smuggling etc., are opposed to public interest

Therefore, these activities cannot be called economic activities.
desirable for society. They must be
(vi) Socially desirable. Economic activities are

in accordance with the expectations and norms of society.

1.3.2 Examples of economic activities

1. Production of goods by a manufacturer in a factory.
2. Distribution of goods by a wholesaler to retailers.
3. Selling of goods by a retailer to customers.
4. Transportation of goods and passengers by railways/roadways/airlines/ships.
5. Storage of goods by a warehouse keeper.
6. Acceptance of deposits and lending of money by a banker.
7. Insurance of risks by an insurance company.
8. Advertising and publicity of goods by an advertising agency.
9. A clinic run by a doctor.
10. Legal services provided by a lawyer in a court.
11. Audit services provided by a chartered accountant in his office.
12. Working of a Government oficer
13. Services of a teacher in a school/college.
14. Working of a farmer in his fields to sell his produce.
15. Working of a nurse in a hospital.

Economic Activities at a Glance

Characteristics
1. Economic motive 2. Productive
3. Rational use 4. Economic resources
5.Economic growth 6. Legally valid
7. Socially desirable
Examples
) Manufacturing goods in a factory.
(i) Selling goods in a shop.
(it) A doctor treating patients in his clinic.
(iv) A lawyer providing legal advice in his own office.
() A professor teaching in a university.
(vi) A clerk working in a Government office.

1.4 NON-ECONOMIC ACTIVITIES

Activities which are undertaken to satisfy social, religious cultural and sentimental
requirements are called non-economic activities. The object of these activities is not to
eam monetary gain or reward. People engage in non-economic activities for reasons of
love, sympathy, religion, patriotism, etc. For example, a mother looks after her children, a
 ISC COMMERCE FOR CLASS
student donates blood, an old
man goes to temple daily, a rich man donates money to
to Prime
Prime
Minister Relief Fund, a
young man helps a blind girl to cross the
roud, ce.
It is the object of any activity that distinguishes between cconomic and non-cco
activities. The primary objective of economic activities is to carn livelihood ar
and create conomic
wealth. On the other
of hand.(the main objective of non-economic activitiesisto eget someson
to
son
social, cultural, religious or recreational satisfaction.) The output of economic activities
Can be measured in terms of money eg.. the activities
salary of &teacher, the tee ol a doctor and the
pronts of a businessman. But the result of non-economic activities cannot be
terms of money.
measured in
Ine same
activity may be economic as well as non-economiC. For example, a nurse
atending a patient in a hospital is an economic activity as the nurse works for a salary. Bu
when the same nurse attends
to her sick at home it is a non-economic
mother activity because
the object is not to
money. Thus,
earn the activity of the
same person economic at may be
one-time or place and non-economic at another time or place. The dividing line is not
activity or the person who is doing it but the objective for which it is undertaken.
Thus,non-economic activities are undertaken due to the following considerations:
0Love and affection-for
example taking dinner with the family, cooking food for
family.
(i) Personal satisfaction. for
example meditating in a park.
-

(in) Physical needs for

example morning walk by a person.
-

) Religious obligation- for example praying in a temple.

()Social obligations-for example helping victims of an accident, flood
or earthquake.
(vi) Patriotism donating blood for
-

injured armymen.
Distinction Between Economic and Non-economic Activities
Point of Distinction Economic Activities Non-Economic Activities
1. Objective Economic objective- To earn Sentimental and emotional obj-|
a living and
acquire wealth ectives-To obtain some sort of
personnal satisfaction.
2. Expectation Money income is expected Money income is not expected
from these activities from these activities
3. Relationship Directly related to income Not related to income and wealth.
and wealth
4. Measurement of Result can be measured in Result cannot be measured in
outcome terms of money terms of money
5. Logic Guided by rational considera- Guided by sentiments and
emo-
tions of cost and beneft tions without regard to gain or |
sacrifice
6. Resources Involve proper allocation and Optimum allocation and use of|
optimum use of resources resources not essential
7. Types or examples Business, Profession and Family-oriented, religious, social,
employment cultural and national
CASSIFICATION OF HUMAN ACTIVITIES-ECONOMIC AND NON-ECONOMIC
7
1.5 TYPES OF ECONOMIC ACTIVITIES
Economic activities are also known as 'occupations. Economic activities or
accupations may be classified into three broad categories as follows:
ECONOMIC ACTIVITIES

Business Profession Employment

1. Business. Business includes all those economic
activities which are concerned with
production and exchange of goods or services with the object of earning profits. Business is
an economic activity because it is undertaken for earning
money and producing wealth. All
organisations which carry on business, activities are called business enterprises or "business
firms'. Similarly the persons who are
engaged in business are known as 'businessmen.
Business creates various types of utilities by making goods and services more valuable and
useful to consumers. When raw materials are converted into finished products, it creates
form utility. Place utility is created by transporting goods from the place of production to
the place of consumption. Goods are stored for future use which results in the creation
time utility. A factory, a shop, a transport company, a warehouse, an insurance of
company,
a bank are all examples of business
activity. Firms providing direct services e.g., tailor,
drycleaner, beauty parlour, etc., are also business enterprises.
2. Profession. The terms profession means an occupation which involves application
of specialised knowledge and skills to earn a living. The persons who are engaged in
profession are called professionals. They render personal services of a specialised nature
to their clients. The service is based on
professional education, training and experience.
Professionals receive fee for their services. Chartered Accountancy, medicine, law, tax
consultancy are examples of professions.
The main features of a profession are as follows
) Specialised body of knowledge. Every profession has a specialised and
systematised body of knowledge. Members of the profession are required to
learn this knowledge.
(i) Restricted entry. Entry to a profession is allowed only to those who have
completed the prescribed education and have passed the specified examination.
(ii) Formal education and training. A profession provides facilities for formal
education and training to those who want to acquire professional qualification.
One must acquire the prescribed degree (e.g. MBBS, CA, LLB, etc.) by
undergoing the prescribed training.
(iv) Professional association. Every profession has its own association. A professional
association is a statutory body and its membership is essential. The association
regulates entry in the profession, grants certificate of practice, formulates and
enforces code of conduct.

Names of Various Professions and their Respective Associations are Given Below:

Professions Professional Professional asosciations

1. Medical Profession Doctors Medical Council of India
2. Law Profession Lawyers Bar Council of India
 8 3C COMMERCE FOR CLASS XI
3. Accounting Profession Chartered The Insitute of Chartered Accounts
of India
Accountants (ICAD
4. Company Secretary Company The Insitute of Company Sccretaries of
Profession Secretaries India (1CS)
5. Cost Accounting Professiosn Cost Accountants The Institute of Cost and Works
Accountants of Indin (1CWAI)
6. Engineering Profession Engincers The Institutions of Engincers (India)

(v) Service motive. Professionalsare expected to emphasiseservices to their clients

rather than economic gain.
(vi ) Code of conduct.The activities of a professional are regulated by a formal code
ofconduct. The code is preseribed by the professional association of which he
IS a member.
3. Employment. Employment mean an econonic activity, wherc people work for
others in exchangc for some remuneration. The persons who work for others are called
*employees. The persons or organisations which engage others to work for them are
called 'employers'. The remuneration by an employer to his employee is known as wages
or salary. The employee performs the work assigned to him by his employer as per the
terms and conditions of employment. There is an oral or written agreement between the
employer and the employee. The employee acts under the guidance and control of his
employer. The employer may be a Governnent (department) undertaking or a private
firm. Employment thus includes all types of jobs in government oflices and private
enterprises. When a professionally qualified person works as an employec he is also said
b e in employment. For example, a doctor may be employed in a hospital, a chartered
accountant may be working as an accountant in a company and a lawyer may serve as a
law officer in a bank.
The main features of employment are as follows
1.
In employment,a person works for others called
2. An employec provides personal service.
employer
3. There is a service agrecmet or contract between the
employce and the employer.
It contains the terms and conditions of
employment.
The employee has to obey the order of the
5. No capital investment is made by the
employe
employcc.
6. The employec gets wage or
salary for his/her servicc.
Various examples of employment are as follows:
(i) A tcacher teaching in a school or college.
(ii) An engineer employed in Muncipal Corporation of Delhi.
(iii) An accountant working in the accounts department of a
company.
iv) A person working as the plant
manager of a factory.
(v) A nurse or doctor working in a hospital.

1.6 DISTINCTION BETWEEN BUSINESS, PROFESSIONN

AND EMPLOYMENT
A. Mode of establishment.A business enterprise is established when an
takes decision to carry
entrepreneur
a on some business
activity. In a profession, on the other hand,
the membership or enrollnent of a recogniscd
professional association or institution is
essential. In order to take up employment, a person has to enter into a contract of service.
CLASSIFICATION OF HUMAN ACTIVITIESECONOMIC AND NON-ECONOMIC 9

Nature ot work. A business exists to provide goods and services to satisty human
wants. On the other hand, a proessional renders personalised service of a specialised
nature to his clients. An employee performs the work assigned by the employer under
the contract of service.
Qualifications. No formal education is compulsory in order to carry on a busines.
But for a protession, specialised knowledge and training are essential, Minimum educational
qualifications are prescribed for every profession. In case of employment, the qualifications
required depend upon the nature of the job.
A Main objective. In business, the basic motive is to carn profits. A professional,
on the other hand, is expected to emphasise the service motive and sense of mission. That
is why, a rigorous code of ethical behaviour is laid down in every profession. In case of
service, the motive of an employee is to earn salary and receive other benefits.
5.
Investment. Every business
requires capital depending upon the nature and scale
of operations. A professional also has to invest some capital to establish an office for
rendering services. There is no need for capital in case of employment.
RiSk. There is an inherent element of risk in business and profession but practically
no risk is involved in case of employment. There can be loss in business but in profession
and employment return is never negative.
N Reward. Profit is the reward of a businessman while professional fee is the reward
of a professional. The reward in case of employment is wage or salary. Wage!salary and
fee are more regular and fixed than profits.
8Transfer of interest. It is possible to transfer ownership interest in business. But
no such transfer is possible in case of profession and employment.
9 Public advertisement. The success of a business depends upon public

advertisements. But professionals prohibited

are
from giving public advertisements. There
is no need for public advertisements in case of service.
In spite of the above differences, there is a closed inter-relation between business,
profession and service. A large business enterprise employs a large number of persons in
order to achieve its objectives. It also requires the services of professional experts such
as chartered accountants, lawyers, architects, cost accountants, etc. Modern business has
become very complex. Trained and experienced managers and other experts are required
for efficient business operations. Professionals and other employees provide the necessary
manpower for efficient running of business concerns. Thus, business, profession and
employment are complementary to one another.
SUMMARY
Meaning of human activities. All activities undertakesn by human beings.
Classification of human activities. All human activities may be classified into two
broad categorieseconomic and non-economic.
Economic activities. These are undertaken to earn money and produce wealth.
Non-economic activities. These are undertaken for religious, social, patriotic and
emotional reasons.
Types of economic activities. These include (i) Business (i) Profession, and (ii)
Employment.
Business. Economic activities concerned with production and exchange of goods
and services with the object of earning profits.
 ISC OMMERCE FOR CLASS
10 XI
Profession. Economic activities involving rendering personalised services of
nature in exchange of fec. Its
features are:
specialised
restricted
(a) specialised body of knowledge (6) entry (c) formal training
(d) professional associations (e) service motive ( code of conduct.
Emplovment. Economic activities wherein people work for others and receive
wages and salary for their services as per the terms and conditions of agreement. Ever

may work as employees.

professionally qualified persons
Distinction Between Business, Profession and Employment

S Point of Business Profession Employmen

No distincrion
To eam profits To render service for To earn wages or
salary
1.Objective economic gains
2. Minimum No qualifications are Minimum educational Qualifications required
essential for starting qualificiations essential depend upon the job
qualifications to enter a profession
a business
Providing specialised Work assigned by the
Production, sale and
3. Nature of work service employer
exchange of goods
and services
An employee works for
4. Status A businessman works A professional works
the guid- his employer and has to
for himself and is his according to

own master elines prescribed follow the instructions

of his master boss

Professional fee which Wage or which is

salary
5. Reward or Profit which is unc-
is certain but flexible regular and fixed
ertain and variable
Return There is no risk
High risk from Risk is negligible
6. Risk and
beginning to end
uncertainty is No capital is required
7. Investment of Adequate amount of Limited capital office
capital capital is required required to set up
depending on the
size of business
Advertisement is Advertisement is prohibi-| No advertisement is
8. Advertising necessary at all
usually necessary ted by the professional
body
Profitability of busi- Quality of service provi-| Productivity and quality
9. Measurement
of efficiency ness is the sole crit- ded to the clients of work performed
erion
Governed by the terms
10. Regulation
business laws
Governed by the regula- Governed by
and and conditions of
the profession
tions guidelines of
employment
11. Transfer of Ownership of busin- Transfer is not
possible Transfer is not possible.
ownership CSs can betransferred
 ECONOMIC AND NON-ECONOMIG
CLASSIFICATION OF HUMAN ACTIVITIES-

EXERCISES

SHORT ANSWER QUESTIONS

1. How would you classify human activities?
2. What do you understand by economic activities?
3. What is meant by non-economic activities?
"The same activity may be cconomic as well as non-economic at different timcs or places
Comment.
5. Name the various types of economic activities.
6. Define the term Business',
7. Define a profession.
8. Name three characteristics of professions.
9.
9. State the objective of cconomic activities.
10. Give two differences between economic and non-economic activities.
11. What is the main aim of human activities? [ISC 1991]
12. Give two examples of 'Direct Service?
13. What is employr ent?
14. Give two examples of profession.
15. Give five examples of business activities.

ESSAY TYPE QUESTIONS

1. Explain the nature of economic activities.
2. Distinguish between economic and non-economic activities.
3. Discuss the various types of economic activities.
4. What is a profession? Explain the characteristics of a profession.
Distinguish between business, profession and employment.
The activities of business, profession and employment are not competitive but
complementary". Explain.

QUESTION BANK
Q. 1. Name the two types of human activities.
Ans. Two types of human activities are:
(i) Economic Activities
(i) Non-economic Activities
Q.2. What do you understand by economic activities?
Ans. Economic activities are undertaken with the object of earning money and acquiring
wealth. These activities result in the production of economic goods and services. Busi
ness is an economic activity but it differs from other economic activities such as those
of an employee, and self-employed persons like doctors, lawyers, chartered accountants,
etc.

Q.3. What is the objective of economic activities?

Ans. The objective of economic activities is to earn money and acquire wealth.
Q.4. Explain the nature of economic activities.
Ans. Economic activities refer to all those human activities which are undertaken to carm a
living and thereby satisfy human wants. The main objective of these activities is to earn
income and create wealth. The money earned through work is used to satisfy wants. For
 ISC COMMERCE FOR CLASS X
2 a doctor attends to patients in his eli
teaches in a school or college,
example, a teacher activities are concened wi
to his customers. Economic
shopkeeper sells goods
a
and services. These activities create utilt
distribution of goods and
the production and activities are also called occupation
the production of wcalth. Economic
and result in
activities are as follows:
characteristics of e c o n o m i c
The main
activities is to produce goods and services for satisfvi
()The motive behind economic sfying
human wants.
allocation of scarce resources so that maximun
num
activities involve proper
i) Economic
from them.
satisfaction can be obtained
utilisation of land, labour, capital and other
Economic activities require optimum
(ii) maximised when best use of resourcee
Welfare of society can be ces
factors of production.
is made.

() Economic activities
are undertaken for production of wealth as represented by goods
motive behind economic activities
is to make an economie
and services. The main
gain.
creation of utilities.
() Economic activities involve
non-economic activities?
Q.5. What is meant by
sentiments and emotions such as love for the
Ans. Non-economic activities are inspired by
and love for the country. These activities are not undertaken
family, desire to help the poor
for monetary gain but for one's satisfaction and happiness.
well non-economic at diferent times or
may be economic as
as
Q.6. "The same activity
places". Comment.

Ans. The same activity may be economic as well as

non-economic. For example, a nurse

the works for a salary.

attending a patient in a hospital is an economic activity
as nurse
But when the same nurse attends to her sick mother at home it is a non-economic activity
because the object is not to carn money. Thus, the activity of the same person may be
economic at one-time or place and non-economic at another time or place. The dividing
line is not the activity or the person who is doing it but the objective for which it is
undertaken.
Q.7. Explain the nature of non-economic activities.
Ans. Activities which are undertaken to satisfy social, religious cultural and senitmental
requirements are called non-economic activities. The objective of these activities is
not to earn monetary gain or reward. People engage in non-economic activities for the
reasons of patriotism, etc. For example, a mother looks after her
love, sympathy, religion,
children, a student donates blood, an old man goes to temple daily, a rich man donates
money to Prime Minister's Relief Fund, a young man helps a blind girl to cross the road,
etc.
It is the object of any activity that distinguishes between economic and non-economic
activities. The primary objective of economic activities is to earn livelihood and create
wealth. On the other hand, the main objective of non-economic activities is to
short of social, cultural,
get some
religious or recreational satisfaction. The output of economic
activities can be measured in terms of
money e.g., the salary of a
teacher, the fee of a
doctor and the profits of a businessman. But the result of
be measured in terms of
non-economic activities cannot
money.
CLASSIFICATION OF HUMAN ACTIVITIES-ECONOMIC AND NON-ECONOMIC 13

Q. 8. Give two differences between economic activities and non-economic activities.

Ans. () Economic activities are carried out to carn moncy whereas non-cconomic activities
are carried out to
get personal or social satisfaction.
(i) Economic activities create wealth but non-cconomic activities do not create wealth.
Q.9. Distinguish between economic activities and non-cconomic activities.
Distinction Between Economic and Non-Economic Activities
Point of Distinction Economic Activities Non-economic Activities
1. Objective To earn a living and acquire wealth To obtain some sort of satisfaction
2. Measurement of Result can be measured in terms of Result cannot be measured in terms
outcome money of money
3. Logic Guided by rational considerations of Guided by sentiments and emotions
cost and benefit without regard to gain or sacrifice
4. Resources Involve proper allocation and and of
optimum Optimum allocation use res-

use of resources ources not essential Family-oriented.

5. Types and Examples Business, profession and employment religious, social, cultural and national

Q.10. Name three types of economic activities.

Ans. Three types of economic activities are:
( ) Business
(i) Profession
(it) Employment
Q.11. Define the term Profession'.
Ans. Profession means an occupation which involves rendering of personal services of an
expert nature.
Q.12. Discuss the various types of economic activities.
Ans. Economic activities are of the following types:
1. Business. Business includes all those economic activities which are concerned with
production and exchange of goods or services with the object of carning profits
Business is an economic activity because it is undertaken for earning money aud
producing wealth. A factory, a shop, a transport company, a warehouse, an insurance
company, a bank - are all examples of business activity.

2. Profession. Profession is an occupation which involves the rendering of personal ser-

vices of a specialised nature. The service is based on professional education, training
and experience. Chartered accountancy, medicine, law are examples of profession.
The main features ofa profession are as under
(i) Rendering of personal service of an expert nature.
(in Providing specialised service for a professional fee charged from the clients.
(in) Minimum qualifications prescribed for a profession to be acquired through formal
education and training.
(iv) Professionals are members of a professional body e.g., the Institute of Chartered
Accountants of India.
()The professional body lays down code of conduct. Its members must obey the
prescribed guidelines and regulations.
14 ISC COMMERCE FOR CLASS X
3. Employment or service.
Aperson is said to be in employment
in service when
or
h
undertakes to render personal services under an agreement of employment. The servi
is rendered for a wage or salary and other benefits attached to the job. There exists
relationship of employer and employee. The employer may be a government departmen
undertaking or a private organisation. The professionally qualified persons are also in
employment in various organisations. A teacher, a clerk, a soldier, a government officer
are some of the examples of employment or service.
Q.13. Classify the following activities into Business, Profession and Employment.
() Sita operating a nursing home.
(ii) Mohan working as an officer in a bank.
(ii) Deepak teaching commerce in a reputed school in Nainital.
iv) Rima running a grocery store.
() Naresh Trehan head of Medanta Hospital in Gurgaon.
(vi) Mukesh Ambani, chairman of Reliance Industries.
(vii) Chanda Kochar, chairman of ICICI Bank.
(viin) MS Dhoni, Captain of the Indian Cricket Team.
(ix) Sachin Bansal CEO of Flipkart.
)Chairman of State Bank of India.
Ans. () Business : (iv), (vi), (i%)
(in Profession (i), (v)
(ii) Employment: (:), (ii), (vu), (V11), (x)
Q.14. Classify the following into economic and non economic activities.
9Teaching in a school.
(i) Taking photographs of family members.
(in) Running a beauty parlor.
(iv) Looking after parents.
() Working as a caretaker in a senior citizens home.
(v7) Distributing blankets to destitutes.
(n) Rearing cows and selling their milk.
(viii) Taking care of pet dog at home.
(ix) Running a brokeage from home.
(x) Looking after one's terrace garden.
Ans. Economic activities : (), (ii), (v). (vii), (ix)
(
(i) Non-economic activities : (ii), (iv), (vi), (viii), (x)