Nature and Scope of Business: Human Activities and Classification of Economic Activities (For CBSE, ICSE, IAS, NET, NRA 2023)

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Every human activity in which one is engaged for purpose of earning one՚s livelihood is known as economic activity.

Human Activities

Every human being is engaged in activity. Activities may be cultivating land, preparing food, playing football, reading storybooks, studying in a school, teaching in college, working in an office, jogging in park and so on. Individuals engage themselves in one activity or other; by doing such activities they are trying to satisfy some of their needs or wants. Activities undertake to satisfy their needs or wants are called human activities.

  • Economic activities: activities that are undertaken with objective to earn money or livelihood are called economic activities.
  • Examples: A farmer growing crops, a Worker working in a factory for salary.
  • Non-economic activities: activities that are undertaken to derive self-satisfaction are called non-economic activities.
  • Examples: engaging in sports for physical fitness, listening to music, providing relief to flood victims.
Economic Activities and Objectives

Classification of Economic Activities

Economic activity can be a one-shot affair or a continuous one. The activities in which individuals engage themselves on a regular basis and earn their livelihood are known as their ‘occupations’ . These can be broadly categorized as

  • Profession
  • Employment
  • Business


Any activity, which requires special knowledge and skill to be applied by an individual to earn a living, is known as Profession. Example: Engineers, Architects, Film-stars, Dancers, Artists etc.

Basic features summarized as follows

  • Occupation for which individual has to acquire a special knowledge and skill.
  • Individual get money for providing such a service is usually known as ‘fee’ .
  • Primary objective of every profession is to provide service though they may charge fee.


When a person works regularly for others and gets wages/salary in return, he is said to be in Employment.

Basic features summarized as follows

  • It is an occupation where a person (called employee) is to work for employer.
  • There are certain terms and conditions of work like, hours of work, duration of work, leave facility etc.
  • The employees get salary or in return of their work.
  • Legally employer-employee relationship is based on a contract.
  • Main purpose behind employment is to secure assured income through wages and salaries.