Economics: Sectors of Production, Specialization, and Demand

Vocabulary practice flashcards covering economic production sectors, specialization, division of labor, and the principles and determinants of demand.

Primary sector

The industries that extract raw materials or Earth's natural resources, acting as key suppliers of raw materials used in production.

Secondary sector

Firms that use natural resources and process them into finished or semi-finished manufactured goods.

Tertiary sector

Businesses that provide services, such as sales, education, banking, and catering, either to individuals or other businesses.

Quaternary sector

A sub-section of the tertiary sector that involves the collection, transmission, and organization of information through information service industries.

Chain of production

The various production stages through which a good or service passes before reaching the consumer, which always ends with the tertiary sector.

Deindustrialization

A shift in an economy marked by a decline in its secondary sector (fewer people working in factories) and a movement towards the tertiary sector.

Specialization

The process where individuals, firms, regions, or countries focus on producing a limited range of goods and services that they can produce most efficiently.

Division of labor

The breakdown of the production process into smaller, more specific tasks, where each worker or group of workers is assigned one task to perform repeatedly.

Exchange economy

An economy that has progressed beyond individuals producing goods and services for their own consumption, favoring trade in exchange for rewards like money.

Effective demand

The quantity of a good or service that a buyer is willing and able to purchase at a given price in a given period of time, backed by purchasing power.

Demand schedule

A table or schedule that shows how much of an item is demanded at given prices.

Law of demand

The principle stating that as the price increases, the quantity demanded decreases, and vice versa.

Demand curve

A downward-sloping line or curve plotted with prices on the y-axis and quantities on the x-axis, demonstrating the negative relationship between price and demand.

Ceteris paribus

A Latin phrase meaning 'all other things being equal,' used when assuming all other variables except those under immediate consideration are held constant.

Contraction of demand

A movement along the same demand curve where the quantity demanded decreases in response to an increase in price.

Extension of demand

A movement along the same demand curve where the quantity demanded increases in response to a decrease in price.

Disposable income

The total personal income of a worker or consumer that remains after taxes.

Normal goods

Goods that follow the law of demand where an increase in consumer income leads to an increase in demand.

Inferior goods

Goods for which demand decreases as consumer income increases, as consumers replace them with more expensive alternatives.

Substitute goods

Products in competitive demand that can be purchased and used instead of another good or service.

Complementary goods

Goods and services in joint demand that are sold and purchased as essential components of a whole.

Market demand

The total effective demand of all consumers who buy a particular good or service, obtained by adding individual demands at different prices.