Knowlege Test 1 Flashcards
MARKET
Where buyers and sellers exchange goods and services.
BUSINESS
Exist in order to provide good and services to the public. These can operate in the public, private and third sectors.
GOODS
Physical objects that a business sells to its customers.
SERVICES
Non-physical products - activities that a business carries out for its customers.
PRODUCTS
Goods and services.
CONSUMER DURABLES
Goods that last for several years and are used large number of times.
SINGLE USE GOODS
Goods or services that are only used once.
NEEDS
They are essential for survival - food, water, shelter, clothing and warmth.
WANTS
They are not essential but we like to have them.
ENTREPRENEUR
Someone who’s willing to take the risk of setting up their own business.
ENTERPRISE
The willingness to take risks, show initiative and take on new ventures.
PUBLIC SECTOR
Organisations that are owned by The State and run by The Government.
PRIVATE SECTOR
Organisations that are not owned by The State, including sole traders, partnerships and limited companies.
THIRD SECTOR
The past of an economy compromising non-governmental and non-profit-making organisation including charities, voluntary and community groups.
PRIVATISATION
The process of selling a public sector organisation to the private sector by changing it into a public limited company.
ADVANTAGES OF PRIVATISATION
- Government can raise income from the sale - potentially leading to lower taxation.
- Private sector involvement is likely to improve efficiency and therefore improve service for customers.
DISADVANTAGES
- Missing markets - if the privatised organisation fails the public then lose the service.
- Higher prices - consumers incur higher prices as the service/product is no longer subsided by the government.
PRIMARY SECTOR
All activities that obtain natural resources - e.g. farming, fishing, forestry and obtaining water.
SECONDARY SECTOR
All manufacturing and construction activities that create finished goods.
TERTIARY SECTOR
Selling finished goods and providing services.
CHAIN OF PRODUCTION
The stages through which a product passes before being sold to a consumer.
ADVANTAGES OF OWNING A BUSINESS AT EACH STAGE
- Reliant on themselves - means the final product is likely to be a higher quality and the service is likely more efficient.
- Economies of scale - unit cost reduction as the business grows.As the business is more efficient its unit cost (cost to make one product) falls.
DISADVANTAGES OF OWNING A BUSINESS AT EACH STAGE
- High mounts of capital needed to takeover or set up business in each stage of production.
- Increased competition from firms in different stages of the production process.
