1.2 Classification of business

Question 1

What are the three sectors in which business activity is broken down into?

Answer 1

• Primary industry: concerned with using natural resources. They include farming, mining and oil drilling; sometimes produce raw materials like iron ore and oil. - Secondary industry: concerned with making and assembling products; manufacturers use raw materials and parts from other industries. - Tertiary sector: give something of value to people, but are not physical goods like cinema, or a lesson. Other examples include banks keeping your money safe, public transport carrying people around etc.

Question 2

What is a mixed economy?

Answer 2

A mix of private sector and public sector enterprises.

Question 3

What is a private enterprise?

Answer 3

• Private sector: the part of the economy where the resources are owned and controlled by both the private and public sectors. - Involves risk -> entrepreneur - If the business succeeds, the entrepreneur makes a profit. - If it fails, he or she will be responsible for the losses (sell personal possessions to meet business’ debts)

Question 4

What is a public enterprise?

Answer 4

• Public sectors: the part of the economy that is owned and controlled by the state or government. - In many countries, the government is a major employer. Governments employ public sector workers to carry out work on their behalf, such as providing a police force, education and health service. - Goal: provide an essential economic service for the nation. - Often funded by taxpayers’ money, so they need to look after the taxpayers’ interests by providing the best possible value for money.

Question 5

What are the reasons for changing importance of business classification?

Answer 5

The size of a country’s different sectors of business activity often indicates if it has a developing or developed economy.