economics 3 Flashcards
Market
a way of bringing together buyers and sellers to buy and sell goods and services
market economy
an economy in which scarce resources are allocated by the market forces of supply and demand
types of market
physical-many stallholders outside or undercover
shop-interaction between shopkeeper and customer
auction-price is set buyers in competition with each other
from home-through internet
primary sector
the direct use of natural resources including extraction of basic materials and goods from lands, agriculture fishing farming forestry mining oil and gas extraction
secondary sector
all activities in an economy concerned with manufacturing: use of raw materials to make goods part into other goods or construction of building/infrastructure
tertiary sector
all activities in an economy that involve the idea of service such as transport retailing entertainment fashion tourism government education health media etc
product market
where final goods and services are offered to consumers, businesses and the public sector
factor market
where the services of the factors of production are bought and sold
role of the factor market
involve the buying and selling of the services of the factors of production
price factors is decided by interactions of demand and supply
demand of factors depends of the good and service produced
households supply labour in return for wages.
role of product market
buying and selling the final goods and services
households, other firms and the public sector are the buyers
price is determined by the interaction of supply and demand for the good or service
specialisation
the process by which individuals firms regions and countries concentrate on producing those products which they are best at doing
exchange
the giving up of something that an individual or firm has in return for something they wish to have and not possess.
specialisation benefits for producers
higher output- total production has increased
higher productivity-as workers become more skilled
higher quality-as the best factors can be employed
bigger market-more buyers for each producer
economies of scale-larger output enables these to be gained
saves time/money
specialisation costs for producers
diseconomies of scale- as output increases so does price
if one part fails then the whole production system may stop
may not be able to buy necessary scarce resources or components
movement of workers- workers may become bored and leave or produce less
specialisation benefits for workers
increased skill so may earn more
workers are able to do what they are best at, again allowing them to earn more
increased job satisfaction-doing what they are good at increases motivation and satisfaction
increased standard of living by earning more
