Role of markets 1

Question 1

What is a market?

examples of markets

Answer 1

A way of bringing together buyers and sellers to buy and sell goods and services

eg.-physical market-shop-auction-internet

Question 2

What is a market economy?

Answer 2

An economy in which scarce resources are allocated by the market forces of supply and demand

Question 3

What is the primary sector?

What does it include?

Answer 3

The direct use of natural resources such as the extraction of materials and goods from the land and the sea

It includes agriculture,farming,mining,forestry ,quarrying

Question 4

What is the secondary sector?

Answer 4

All activities in an economy concerned with manufacturing or construction

turn materials into manufactured goods

Question 5

Manufacturing vs Construction:

Answer 5

Manufacturing***********
includes;
-the DIRECT USE of raw materials from primary sector eg to make petrol,cheese,furniture
-INDIRECT USE of raw materials to make COMPONENT products eg for cars or phones or handicrafts

Construction********
-process of constructing a building or infrastructure eg.houses

Question 6

What is the tertiary sector?

Answer 6

All activities in an economy involving the idea of a service

Question 7

What is the difference between factor and product markets?

Answer 7

Factor Market ______________

Market in which the SERVICES OF FACTORS OF PRODUCTION are bought and sold e.g. skills of workers (labour), raw materials (capital), buildings (land) and
ideas (enterprise).
The price is determined by supply
and demand and is of DERIVED demand.

Product Market_____________

Market in which FINAL GOODS AND SERVICES e.g. cars or stationary, are offered to consumers, businesses and
the public sector.
The price is determined by supply and
demand

Question 8

Households are involved in
both factor and product
markets. They consume
goods and services that are
produced in the product
market. They also supply
labour to firms, which in turn
pays them wages in the factor
market. Households then use
wages to buy goods and
services in the product
market

Derived demand

mean that………………………….

Answer 8

Product and Factor Markets are interdependent

Question 9

SuMMarise factor market:

Answer 9

• refers to buying and selling of SERVICES of factors of production
• demand for factors is derived
• price determined by interaction between supply and demand
• households supply labour in return for wages

Question 10

SuMMarise product market:

Answer 10

• buying and selling of final goods and services
• households ,other firms and public sector are the buyers
• price is determined by interaction between supply and demand