Unit 1.2 - classification of businesses

Question 1

What is an economy?

Answer 1

System which organizes the money, industry and trade of a country/region; how money flows and resources are used in a country or area to meet people’s needs and wants..

Question 2

What are the 3 economic/industry sectors + example jobs?

Answer 2

1. Primary sector - businesses in this sector extract the natural, raw materials from the Earth. E.g. fruit picker, coal miner. Majority of workforce in LDCs are employed in the primary sector due to these being low-skilled jobs that are poorly paid due to the low value of materials
2. Secondary sector - firms in this sector combine the raw materials extracted in the primary sector to manufacture the finished goods. E.g. house builder, baker
3. Tertiary sector - provides services top consumers & other businesses. E.g. doctor, hair dresser. This is the biggest sector in developed economies/countries (because people feel secure in their jobs are are willing to spend money on wants).

Question 3

What 3 factors affect economic activity?

Answer 3

1. Availability of raw materials - resources are used up more quickly by larger economies (developed) which means that workers in the primary sector are no longer needed
2. Increase in national wealth - an increase in average country wealth leads to people looking for more secure and better paying jobs, moving from primary to secondary to tertiary sector.
3. International competitiveness - more employees working in the secondary & tertiary sector usually means an increase in wages, so businesses in developed countries often move their operations in the primary sectors to other countries for lower employment costs.

Question 4

What is deindustrialization?

Answer 4

The decline in manufacturing & production of goods (secondary sector) and the growth of services (tertiary sector) in a developed country/region

Question 5

What is a newly industrialized economy?

Answer 5

A country that has rapidly expanding industries in the secondary & tertiary sectors.

Question 6

What is the industrial structure?

Answer 6

The relative size and importance of industrial sectors in an economy.

Question 7

What are the 3 types of economies?

Answer 7

1. Marked economy - an economic system where supply and demand direct the production of goods and services. Not controlled by the government. Prices are determined by business owners, based on supply and demand. There is no public sector.
2. Mixed economy - a mixed of privately-owned and government-owned businesses in a country; an economic system which combines a market economy with government planning and ownership of resources.
3. Planned economy - an economic system which the government or central power directs all economic activity like how resources are produced, what goods are produced and how they are prices, etc.