1.2 - Classification of Businesses

Question 1

What does the primary sector do?

Answer 1

This sector produces tand extracts raw materials and deals with all human activity surrounding it.

Question 2

What does the secondary sector do?

Answer 2

This sector takes the raw materials and generates finished goods for consumption with it.

Question 3

What does the tertiary sector do?

Answer 3

This sector delivers services to the primary sector, secondary sector, and the public.

Question 4

The importance of a sector is determined by…

Answer 4

• The percentage of the country’s total number of workers employed in each sector.
• Value of output of goods and services and the proportion of this in the total national output.

Question 5

What is the private sector?

Answer 5

Where private individuals own and run a business venture. Their aim is to make a profit, and all costs and risks of the business is undertaken by the individuals.

Question 6

What are two advantages of the private sector?

Answer 6

• High efficiency and lower costs
• Competition is encouraged (lower prices)

Question 7

What are two disadvantages of the private sector?

Answer 7

• Some services may be closed (they went bankrupt)
• Workers may lose jobs

Question 8

What is the public sector?

Answer 8

Where the government owns and runs business ventures. Their aim is to increase the welfare of their citizens, they do not make profit.

Question 9

What are two advantages of the public sector?

Answer 9

• Business is funded by government.
• Encourage more jobs.

Question 10

What are two disadvantages of the public sector?

Answer 10

• Low efficiency
• No competition between businesses.

Question 11

What is deindustrialization?

Answer 11

This occurs when there is a decline in the importance of the secondary/manufacturing sector of industry in a country.

Question 12

What is privatisation?

Answer 12

Selling some public sector businesses, owned and controlled by the government, to private sector.

Question 13

What is nationalisation?

Answer 13

When the government buys the company from the private sector.

Question 14

What are some advantages of privatisation?

Answer 14

• The quality of products would improve due to the competition
• Efficiency would increase
• The costs of products would be controlled due to the profit motive

Question 15

What are some disadvantages of privatisation?

Answer 15

• Unemployment would increase to cut costs
• Social objectives are not focused on