Chapter 2 - Classification of Businesses

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20 Terms

1

Govt

________ needs cash- new owners have additional cash to invest- improved service offered by the business.

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2

Profits

________ are used within the organisations.

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3

eg

aggriculture, forestry, mining, fishery

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4

eg

factories, industries, construction craft

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5

eg

trade, banks, transport, eductaion, culture, health

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6

increases competetion

efficiency/low prices

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7

decision making changes

based on efficiency & not on govt subsidies

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8

Sale

money for the government

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9

Job Losses

umeployment benefits extra cost to government

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10

Risk of monopoly

higher prices

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11

What is the primary sector of the industry?

The primary sector extract raw materials from the Earth

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12

What is the secondary sector of the indsutry?

The secondary sector manufactures goods using raw materials bought from the primary sector

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13

What is the tertiary sector of the industry?

The tertiary sector provides services to consumers, businesses & other sectors of the industry

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14

What is de-industrialisation ?

This occurs when there is a decrease in the importance in the secondary sector (manufacturing industry) of the industry

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15

Define 'private sector'

Private sector is a sector of the industry, which consists od businesses owned by private individuls; they keep any profits

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16

Define 'public sector'

Public sector is a sector of the industry which consists of organisations that are state-owned (owned by the local or national govt). All profits are used within the organisation

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17

What is a mixed economy ?

Countries that have a mixed economy consist of both private sector & public sector

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18

What is privatisation ?

This is when the governments sell state-owned businesses to new owners in the private sector

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19

What are the 5 advantages of privatisation

  1. The new owners have a profit motive, so the business is more efficient. 2) Privatissation increases competetion, which translates ti low prices & efficiency. 3) The new owners have additional cash to invest so, the services offered are improved. 4) Decision making chnages and is now based on efficiency. 4) The sale of the business translates to more moeny for the govt

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20

What are the 4 advantages of privatisation ?

  1. Since private forms mainly run for profit, some people in rural areas might lose services. 2) The losses of jobs means that the govt must pay unemployement benefits, which is an extra-cost.. 3) RIsk of monopoly, which means the new owners might increase prices. 4) This benefits only new owners, where as public sector entities will benefit the whole country

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