(a) Distinguish between economic activities and an economic system. [5 marks] (b) Explain the following
(a) Distinguish between economic activities and an economic system. [5 marks]
(b) Explain the following terms:
(i) production; [5 marks]
(ii) distribution; [5 marks]
(iii) consumption15 marks]
Explanation
(a) Economic activities are what people do to earn a living. For example, people are engaged in farming and trading. Economic system on the other hand refers to the mode of production and the distribution of goods and services within which economic activities take place.
(b)(i) Production is an activity that involves the creation of goods and services which satisfy human wants. For example activities of a doctor and musician.
(ii) Distribution: This is the process of storing and moving goods to consumers through intermediaries such as wholesalers and retailers.
(iii) Consumption means the use of economic goods and services to satisfy human wants. Such goods may be consumer or producer goods e.g. consumption of foodstuffs and the services of a doctor.