If a person sells his personal laptop to his friend and earns profit, will it be considered as business ? Which other features are required to regard an economic activity as business ?
No, it will not be considered as a business. Business involves the sale and purchase of goods on a regular ( basis. A single transaction of sale or purchase does I not constitute business. Business has the following characteristics/features:
Characteristics of business are as follows :
- An economic activity : Business is considered to be an economic activity because it is undertaken with the objective of earning money or livelihood and not because of love, affection, sympathy or any other sentimental reason.
- Production or procurement of goods and services : Before goods are offered to people for consumption, they must be either produced or procured by business enterprises. Thus, every business enterprise either manufactures the goods it deals in or acquires them from producers to be further sold to consumers.
- Sale or exchange of goods and services for the satisfaction of human needs: Directly or indirectly,
business involves transfer or exchange of goods and services for value and for satisfaction of human needs. - Dealing in goods and services on a regular basis :
Business involves dealing in goods or services on a regular basis. One single transaction of sale or purchase does not constitute business. - Profit earning: One of the main purpose of business is to earn income by way of profit. No business can survive for long without earning profit.
- Uncertainty of return: Uncertainty of return refers to the lack of knowledge relating to the amount of profit that the business is going to earn during a given period.