2.1 - THE ROLE OF MARKETS

Economics

What is market?

A way of bringing together buyers and sellers to buy and sell good or services

What is a "market economy"?

An economy in which scarce recourses are allocated by the market forces of supply and demand

What is the primary sector?

The direct use of natural recourses, such as the extraction of basic goods and materials from the land or sea

What is the secondary sector?

All activities in an economy concerned with either manufacturing or construction

What is the tertiary sector?

All activities in an economy that involve the idea of a service

What is the factor market?

Market in which the services of the factors of productions are bought and sold

What is the product market?

Market in which final goods or services are offered to consumers, businesses and the public sector

What is specialisation?

When an individual, firm, region or country concentrates on producing those products that they are best at producing

What is exchange?

The giving up of something that the individual or firm has, in return for something they wish to have but do not possess

What is two benefits of specialisation for producers?

Higher output and Higher Productivity

What is two costs of specialisation for producers?

Dependence on other producers (Rely on other businesses to provide the materials, parts, or services they need) and reduced flexibility to adapt (Specializing in one product means it's harder for producers to switch to making other products if the demand for their product decreases.)

What is two costs of specialisation for workers?

Job boredom and risk of unemployment ( If workers are highly specialized in one skill or task, they might struggle to find new jobs if their industry declines or becomes obsolete)

What is two benefits of specialisation for workers?

Increased skill and increased standard of living