The Role of Markets Flashcards
What does the Primary sector refer to?
State examples:
The primary sector is the direct use of natural resources, such as the extraction of basic materials and good from land and sea
Fish, vegetables, raw materials for the production of other goods, like slate quarrying.
What does the Secondary sector refer to?
State examples:
The secondary sector is all the activities in an economy that are concerned with either manufacturing or construction
This can be the direct use of raw materials from the primary sector, such as refining oil to make petrol, or making cheese or furniture
Can be making component products for cars, or mobile phoes.
What does the Tertiary sector refer to?
State examples:
The tertiary sector are all activities in an economy that involve the idea of a service
This can be transport, retailing, entertainment, tourism and finance
What is the difference between tertiary and secondary sectors?
State an example:
The tertiary sector differs from the secondary sector since services are based on people dealing with other people directly, whereas the secondary sector is concerned with the production of the actual good.
Car for example can be physically touched (tangible), but car insurance cannot be touched (intangible)
What is a factor market?
The factor market is the market in which the services of the factors of production are bought and sold
Define a market?
A market is a way of bringing together buyers and sellers to buy and sell goods and services
What is specialisation?
Specialisation is the process by which individuals , firms, regions and whole economies concentrate on producing the products that they are best at producing
What is the definition of exchange?
Exchange is the giving up of something that the individual or firm has, in return for something that they wish to have but do not possess.
What is a product market?
A product market is a market in which final goods or services are offered to consumers, businesses and the public sector.
What is the 6 benefits of specialisation and exchange for producers?
Higher output: total production of goods and services is increased. In some areas, it is possible to use automated systems or specialist equipment.
Higher productivity: workers who specialise in one task become as skilled as they possible can in that area, which increases productivity (output per worker per hour)
Higher quality: the best and most suitable factors of production can be employed to produce the output. Producers can buy the best components for specialists instead of having to make them
Bigger market: if all the producers specialise, then for each product there should be more buyers for each producer
Time saving: it takes time to stop producing one product and starting another, so specialisation saves time and money
Economies of scale: Larger output will enable the producer to gain economies of scale
What are the 4 costs for producers if they specialise and exchange?
As output increases, costs may eventually rise. This is becuase resources may become shorter in supply or it takes more people to organise the workforces
Dependency: production of goods and services depends on all parts working well. Problems such as technical failure or a strike can lead to the whole process stopping
Failure of exchange: exchange can fail if it is not possible to buy the scarce resource or components needed to produce, or if the supplier greatly increases the price or restricts production
Movement of workers: workers may become bored and leave (known as labour turnover) so that new workers have to be recruited and trained. This can particularly affect low-skilled and low-paid work. In the UK the employee turnover rate is about 12% each year, i.e. one worker in eight change jobs every 12 months. This change in workforce in highest in areas such as retailing, hotels, catering and leisure.
What is division of labour?
Where workers specialise in, or concentrate on, one area of the production process
What are the 4 benefits of specialisation and exchange for workers?
Increased skill: by specialising, workers become more skilful in and knowledgeable about their work. This can result in them earing more money.
Natural strengths: workers are able to do what they are best at and don’t have to do work they’re not so good at. This should again allow them to earn more.
Increased job satisfaction: allowing workers to do what they’re good at is likely to improve their motivation and satisfaction in work
Increased standard of living: by earning more money, workers can buy more goods to satisfy not noly their needs, but also some of their wants
What are the 3 costs for specialising and exchange for workers?
Boredom: doing the same job every day may become boring and lead to demotivation
Deskilling: by specialising, workers lose their skills to do other types of work and are less able to respond to changes in demand
Unemployment: if there is a fall in demand for a particular product, workers may find it difficult to get another job becuase they do not have the necessary skills or experience. This may also occur because machines can replace their work.
What are the benefits of specialisation and exchange for regions?
Efficient use of resources: a region could specialise in a particular industry due to availability of resources, so it will be easier to use that resource efficiently
Create jobs for residents: the development of an industry in a particular region helps the residents of that area, since they can find work near to their homes
Infrastructure development: a region that specialises in a particular industry will develop both infrastructure and supply industries to support that industry. This will lead to further regional development
