chapter 2 - classification of business

Question 1

what are the examples of the primary sector? (2)

Answer 1

• The primary sector is the first step in the supply chain. It includes companies as farms, oil companies, fishing companies or mining companies.
• They produce or extract first need materials as corn, wheat, eggs, milk, gas, petroleum, fish, coal or metals.

Question 2

what are the examples of the secondary sector? (2)

Answer 2

• Many of these industries consume large quantities of energy and require factories and machinery to convert the raw materials into goods and products (baking, aircraft, construction, computers).

Question 3

what are the examples of the tertiary sector? (2, 4sub)

Answer 3

• Commercial companies – sell goods to the customer.
   Food, plants, gas, etc.
   Catering
• Service companies – sell services to the customer.
   Banks, healthcare, transport, communication, etc.
   Travel agents, hotels.

Question 4

what are the relative importance of economic sectors? (2)

Answer 4

• Some countries depend on primary industries – farming and mining as these industries employ many more people than manufacturing or service industries.
• Some countries depend on secondary and tertiary sectors a the two are likely to employ many more workers than the primary sector. It is common to find that many manufactured goods are bought in from other countries. Most workers will be employed in the service sectors  higher output  called mostly developed countries.

Question 5

what are the reasons for changes in the relative importance? (3)

Answer 5

• Source of some primary products, such as timber, oil and gas, become depleted.
• Most developed economies are losing competitiveness in manufacturing to newly industrialized countries such as Brazil, India and China.
• As a country’s total wealth increases and living standards rise, consumers tend to spend a higher proportion of their incomes on services such as travel and restaurants than on manufactured products produced from primary products.

Question 6

in many countries, what do the governments control?

Answer 6

• In many countries, government controls health, education, defence, public transport, water supply and electricity supply.

Question 7

what are the ownerships of a business? (2)

Answer 7

public sector and private sector

Question 8

what are the advantages of privatization? (3)

Answer 8

 More efficient because their main objective is profit therefore costs must be controlled.
 Private sector owners might invest more capital in the business.
 Competition helps improving products’ qualities.

Question 9

what are the disadvantages of privatization? (2)

Answer 9

 Unemployment rate increases because the business employs less workers to cut costs.
 Less likely to focus on social objectives.