In order to function normally in society, the population must drink, eat, wear shoes, dress, live in an apartment or house, etc. And since it does not exist in its pure form, people have to produce it. And at the ordinary level, it turns out that the economy and production are one and the same.
But in a primitive, slave or feudal society, there was no such thing as an "economy". Production then was based on non-economic methods: coercion and violence. And getting the result became the main goal, which did not depend on the amount of costs.
Economic activity is impossible without production. Participants in production must adhere to the principle of general economic expediency. In conditions of such relations, the economy has a place to be. Thus, it needs to be linked to results and costs incurred.
The ratio of these indicators expresses efficiency. Economic activity should reflect the productivity of the production of the whole society. And since in such production the basis is satisfactionthe needs of citizens, then the effectiveness of the resulting product expresses the overall economic result.
Classification of types of economic activity (according to the all-Russian OKVED classifier) is carried out according to certain criteria. They characterize a certain field of activity, technologies and production processes.
Efficient economic activity is a state in which the needs of the population are fully satisfied. At the same time, the degree of satisfaction of the needs of one citizen cannot be increased by worsening the situation of another. It's called "Pareto Efficiency" after the Italian economist. Productivity is the most important category of the economy.
There are 4 stages of economic activity.
1) Reproduction. It is a constantly repeating production process. It can be extended or simple. With the latter, production volumes do not grow, but with the former, vice versa. In the current society, of course, the extended one prevails.
2) Distribution. Represents the distribution of goods received as a result of production among members of society. This stage also includes the distribution of members of society and the means of production by industries and areas, economic enterprises and regions, work areas and workshops. In this case, this stage is an element of production.
3) Exchange. An independent function, which is the movement of the product. In production - exchangeabilities and activities.
4) Consumption. The final stage in the movement of a product, as a result of which human needs are satisfied. It includes personal consumption, which ensures the reproduction of labor force, and creates incentives for improving production and further development. In addition, there may be production consumption, which consumes materials in the process of creating products.
Thus, economic activity proceeds in turn from production to distribution, exchange, and then to consumption.
