Industrial Sectors and Markets

Market

A place where buyers and sellers come together for buying and selling goods.

Factors of Demand

Elements influencing consumer purchasing behavior.

Goods

Tangible items satisfying human wants.

Services

Intangible acts paid for by customers.

Primary Sector

First stage of production involving raw materials.

Secondary Sector

Manufacturing stage of production for finished goods.

Tertiary Sector

Final stage providing services to consumers.

Interdependence

Mutual reliance among industrial sectors.

Factor Markets

Markets for buying and selling factors of production.

Product Markets

Markets for buying and selling goods/services.

Derived Demand

Demand for a good due to another good's demand.

Specialisation

Focus on specific tasks or products by workers.

Specialisation pros for workers

• Increased productivity - faster and more accurate work

• Potentially higher wages - high demand for greater expertise may lead to higher pay

• Increased morale and pride - workers feel more confident and fulfilled from their well-completed work

• Increased efficiency - optimised utility of resources leading to greater efficiency

Specialisation cons for workers

• Limited career flexibility - restrict worker’s ability to take on new roles, tasks and skill sets

• Boredom - repetitive tasks can lead to dissatisfaction and burn out

• Low skill set ranges - less likely to practise skills outside of specialisation

• Reliance on specialised career - if demand for skills falls, worker may experience unemployment as they have restricted skill sets

Specialisation pros for producers

• Increased productivity and efficiency - workers become highly skilled and efficient

• Lower costs - increased productivity and economics of scale may lead to reduced costs

• Economies of scale - make production increase easier and benefit from reduced costs

• Higher quality products - focus on specific tasks leads to better control and consistency

• Lowered training costs - workers already experienced and efficient

Specialisation cons for producers

• Dependency - reliance on specialised workers can make producers vulnerable when faced with issues involving workers

• Limited skilled and knowledge - limited workers’ ability to adapt to new situations and problems

• Potential reduced worker motivation - workers may become bored and inefficient

Division of Labour

Breaking production into separate tasks for efficiency.

Demand

Willingness and ability to buy a good or service in a given time and price.

Law of Demand

Higher prices lead to lower quantity demanded, and lower prices lead to higher quantity demanded.

Individual Demand

Demand for a good by an individual or household.

Market Demand

Total demand from all buyers in a market.

Demand Curve

Graph showing relationship between price and quantity demanded.

Complementary Goods

Goods that are consumed together; as demand for one increases, the demand for other also increases.

Substitute Goods

Goods that replace each other; as demand for one increases, the demand for other decreases.

Price Elasticity of Demand (PED)

Responsiveness of demand to price changes.

Elastic Goods

Demand changes significantly with price changes.

Inelastic Goods

Demand changes little with price changes.

Unit Elastic

Demand changes proportionately with price changes.

PED = 1

Perfectly Inelastic

Demand remains constant regardless of price changes.

PED = 0

Revenue

Income gained by a producer through the sales of a product/service.

Basic Economic Problem

Scarcity of resources versus unlimited human wants.

Consumers

Individuals using goods or services.

Producers

Entities creating goods or services.

Factors of Production

Inputs used to produce goods and services.

Capital

Investment goods aiding future production. E.g. sewing machines, tools, tables

Enterprise

Idea for utilizing factors of production in business / to start a business.

Land

Space for business operations and resource extraction.

Labour

Human input in business operations.

Opportunity Cost

Value of the next best alternative.

Economic Groups

Consumers, producers, and government.

PASIFIC (factors impacting demand)

Population

Advertisement

Substitutes

Income

Fashion and Taste

Income tax

Cost

Advertising

Promotional activities to influence consumer behavior.

Income Tax

Tax on individual or corporate earnings.

Fashion and Taste

Consumer preferences influencing demand.

Weather and Disease

Good/Bad weather impacting agricultural production.

Market Share

Percentage of total sales in a market held by a firm.