Why is business considered an economic activity?


– Harshvardhan, Subject Matter Expert at Edumarz


Solution: Business is considered an economic activity as it fulfills the characteristics of Economic activities and is one of the three types of economic activities apart from Employment and Profession. Economic activities are those by which people earn their livelihoods. The objective behind doing Economic activities is to earn money. Economic activities can be undertaken at any level i.e. owning a sole proprietorship, becoming a partner in a firm, or becoming a shareholder in a company. These are all economic activities.

Business refers to an occupation in which people regularly engage in the Purchase, production, and sale activities of goods and services to satisfy the wants of other people in a society.


Economic activity can also be characterized by an absence of social welfare as a motive. In other words, an activity not undertaken with the objective of love, affection, sympathy or any other sentimental reason can be termed as an economic activity. Since business involves charging money for goods or services rendered,it is considered an economic activity involving the production and sale of goods and services with a motive of earning profit by satisfying human needs and wants in a society.

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