Chapter 2 Classifications of businesses

Question 1

Primary Sector

Answer 1

Extracts and uses natural resources of the Earth to produce raw materials, that are to be used by another business.

Question 2

Secondary Sector

Answer 2

Businesses in the secondary sector use the raw materials from the primary sector in order to produce the finished goods

Question 3

Tertiary Sector

Answer 3

Businesses in the tertiary sector sell the finished goods, from the secondary sector, directly to the consumer. They also provide services to businesses in other sectors.

Question 4

De-industrialisation

Answer 4

The decline in the importance of the secondary sector,.

Question 5

Private sector

Answer 5

Businesses not owned by the government. All decisions are taken by the business itself including what to produce, how much to produce, and who to produce for.

Question 6

Public sector

Answer 6

These are businesses owned or controlled by the government. The government takes all the business decisions including what to produce, how much to produce, who to produce for to, etc.

Question 7

privatisation

Answer 7

When the government sells a public sector business to a private-sector business

Question 8

Capital

Answer 8

Money invested into a business by owners, investors, etc.

Question 9

What is nationalisation

Answer 9

When a private sector business is sold to the government

Question 10

How to calculate relative importance of economic sectors

Answer 10

» percentage of the country’s total number of workers employed in each sector

» value of output of goods and services and the proportion this is of total national output.

Question 11

Why would relative importance of economic sectors change

Answer 11

As a business develops more and more - progresses to tertiary sector

Primary sector resources got depleted

developed economies are losing competitiveness in manufacturing to newly industrialised countries such as Brazil, India and China - so theres deindustrialisation in those economies since they may chose to import more.

Countries total wealth increases - higher standards of living - consumers spend more income on more lavish goods than primary sector goods