The economic activity of man is inherently expedient activity, i.e. the efforts made by people are based on well-known calculation, and their direction has the character of satisfying human needs.
A person’s economic activity affects his life activity, because in the process of managing people, on the one hand, they spend energy, resources, etc., and on the other hand, replenish their living expenses. In this situation, the economic entity (a person in economic activity) has to strive to rationalize their own actions. It is possible to act rationally only if the costs and benefits are correctly correlated, which, however, does not guarantee that there are no errors in making decisions that require human economic activity.
Human economic activity in the biosphere is a very complex and confusing complex, consisting of phenomena and processes of various kinds. Theoretical economics in this aspect distinguishes four stages, which are represented by production, distribution, exchange and consumption.
Production and economic activities are processes that result in the creation of material and spiritual goods that are necessary for humanity to exist and develop.
Distribution is a process during which the shares (quantity, proportions) are determined, according to which each business entity takes part in the creation of the manufactured product.
Exchange is the process of moving wealth from one business entity to another. In addition, exchange is a form of social communication between producers and consumers.
Consumption is inherently a process of using production results in order to meet any needs. Each of the stages of economic activity is interconnected with the others, and they all interact with each other.
The characterization of the relationship between the stages of economic activity requires an understanding of the fact that any production is a social and continuous process. Constantly repeating itself, production develops - from simple forms to modern production. Although these types of production seem completely dissimilar, the general points that are inherent in production as such can still be distinguished.
Production is the basis of life and the source of the progressive development of a society in which people exist, the starting point of economic activity. Consumption is the final destination, and distribution and exchange are the associated stages that link production and consumption. Despite the fact that production is the primary stage, it serves only for consumption. By consumption, the final goal is formed, as well as the motives of production, since in consumption products are destroyed, they have the right to dictate a new order to production. In the event that the need is satisfied, it creates a new need. It is the development of needs that serves as a driving force, as a result of which production develops. Moreover, the emergence of needs is determined precisely by production - when new products appear, the corresponding demand for these products and their consumption occurs.
Just as production depends on consumption, so distribution and exchange depend on production, since in order to distribute or exchange something, it is necessary that this something be produced. Moreover, distribution and exchange are not passive with respect to production, and are able to have an opposite effect on it.