Chapter 2 Flashcards
Classification of business (primary, secondary, and tertiary sectors)
What is the primary sector of industry?
Extracts and uses the natural resources of Earth to produce raw materials used by other businesses.
What does the secondary sector of industry do?
Manufactures goods using the raw materials provided by the primary sector.
What is the tertiary sector of industry?
Provides services to consumers and the other sectors of industry.
What is deindustrialization?
Occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.
What is a mixed economy?
Has both a private sector and a public (state) sector.
What is capital in the context of business?
The money invested into a business by the owners.
What does Stage 1 of economic activity refer to?
Primary Sector – an industry that extracts and uses natural resources of the earth to produce raw materials.
Provide an example of the primary sector.
Farming, fishing, coal mining.
What does Stage 2 of economic activity refer to?
Secondary Sector – an industry that manufactures goods using the raw materials provided by the primary sector.
Provide examples of the secondary sector.
Building construction, aircraft and car manufacturing, computer assembly, bread baking.
What does Stage 3 of economic activity refer to?
Tertiary Sector – an industry that provides services to consumers and other sectors of the industry.
Provide examples of the tertiary sector.
Transport, banking, retail, insurance, hotel.
What factors are compared to assess the relative importance of economic sectors?
- Percentage of the total number of workers employed in each sector
- Value of output of goods and services compared to total national output
Which sector is typically more important in developing countries?
Primary industry.
What characterizes economically developed countries regarding manufacturing?
Many manufactured goods are bought in from other countries.
In most developed countries, what is the output of the tertiary sector compared to the other sectors?
Higher than the two other sectors combined.
What are some reasons for changes in sector importance?
- Sources of some primary products become depleted
- Most developing countries are losing competitiveness
- Living standards of consumers rise
What is privatisation?
When government sells some public sector businesses to private sector businesses.
What is the objective/goal of a businessman?
Earn profit.
What is the objective/goal of the government?
Service to the people.
Why does the government privatise public sector businesses?
- Private sector business is more efficient
- Private business can invest more capital than the government can afford
- Competition can improve product quality
Which sector is most important for your country?
It depends on what is meant as important for the country.
