Classification of Businesses (Chapter 2)..

Question 1

Name the three Stages of economic activity.

Answer 1

Primary Sector.
Secondary Sector.
Tertiary Sector.

Question 2

What is the primary sector?

Answer 2

The primary sector of industry extracts and uses the natural resources of Earth to produce raw materials used by other businesses.

Question 3

Give three examples of the primary sector of industry.

Answer 3

Activities in the primary sector of industry include:
Farming, fishing, forestry and the extraction of natural materials, such as oil and copper ore.

Question 4

What is the secondary sector?

Answer 4

The secondary sector of industry manufactures goods using the raw materials provided by the primary sector.

Question 5

Give three examples of the secondary sector of industry.

Answer 5

Activities in the secondary sector of industry include building and construction, aircraft and car manufacturing, computer assembly, bread baking.

Question 6

What is the tertiary sector?

Answer 6

The tertiary sector of industry provides services to consumers and the other sectors of industry.

Question 7

Give three examples of the tertiary sector.

Answer 7

Activities in the tertiary sector of industry include transport, banking, retail, insurance, hotels, and hairdressing.

Question 8

Which sector of industry do you think the following fall under:
Insurance.
Forestry.
Computer assembly.

Answer 8

Insurance = tertiary sector of industry.
Forestry = primary sector of industry.
Computer assembly = secondary sector of industry.

Question 9

Usually, the three sectors of the economy are compared by: Name them.

Answer 9

Percentage of the country’s total number of workers employed in each sector
OR
Value of output of goods and services and the proportion this is of total national output.

Question 10

What is de-industrialization?

Answer 10

De- industrialization occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.

Question 11

There are several reasons for changes in the relative importance of the three sectors over time: Name regarding primary products.

Answer 11

Sources of some primary products, such as timber, oil and gas, become depleted.

Question 12

There are several reasons for changes in the relative importance of the three sectors over time: Regarding newly industrialized countries?

Answer 12

Most developed economies are losing competitiveness in manufacturing to newly industrialized countries such as Brazil, India and China.

Question 13

There are several reasons for changes in the relative importance of the three sectors over time: Regarding consumer’s incomes?

Answer 13

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 than on manufactured products produced from primary products.

Question 14

What is a mixed economy?

Answer 14

A mixed economy has both a private sector and a public sector.

Question 15

What are private sector businesses?

Answer 15

Private sector businesses are businesses not owned by the government.

Question 16

Private sector businesses are businesses not owned by the government. What type of decisions do private sector businesses make?

Answer 16

These businesses will make their own decisions about what to produce, how it should be produced, and what price should be charged for it.

Question 17

What do most businesses in the private sector aim to make?

Answer 17

Most businesses in the private sector will aim to make a profit.

Question 18

What are public sector businesses?

Answer 18

Public sector businesses are businesses that are government (or state) owned and controlled businesses and organizations.

Question 19

What type of decisions do public sector businesses make?

Answer 19

The government, or other public sector authority, makes decisions about what to produce and how much to charge consumers.

Question 20

Some goods and services are provided free of charge to the consumer, such as_____.

Answer 20

Some goods and services are provided free of charge to the consumer, such as state health and education services.

Question 21

The free-of-charge services and goods that the public sector businesses provide are paid for by?

Answer 21

The money for these free goods or services some not from the user but from the taxpayer.

Question 22

Which business activities are usually in the public sector? Name 6.

Answer 22

• Health.
• Education.
• Defense.
• Public transport.
• Water supply.
• Electricity supply.

Question 23

What is privatisation?

Answer 23

Privatization describes the process by which a business goes from being owned by the government to being privately owned by being sold.

Question 24

Why have governments privatised businesses?

Answer 24

Private sector businesses are more efficient than public sector businesses because their main objective is to make a profit and therefore costs must be controlled.

Question 25

Give another reason as to why a government might privatise a business?

Answer 25

Private-sector owners might invest more capital in business than the government can afford and competition between private sector businesses can help to improve product quality.

Question 26

Define capital.

Answer 26

Capital is the money invested into a business by the owners.

Question 27

Name two disadvantages of private sector businesses.

Answer 27

• A business in the private sector might make more workers unemployed than a public sector business in order to cut costs.
• Private sector business is also less likely to focus on social objectives.