Section 1

Question 1

importance of sectors to economies

Answer 1

the importances of economies are compared by:

• 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

point 1 explained: in developing countries the primary sector employs way more than the other 2 sectors because there is very little demand for insurance, transport, hotels etc. and most people still live in the rural areas with low incomes

Question 2

factors affecting importance of sectors to an economy

Answer 2

• sources of raw materials in the primary sector can become depleted
• most developed countries are losing competitiveness in manufacturing to newly industrialised countries
• as wealth of country increases so does living standards and peoples income hence money is spent on traveling or restaurant services rather than on manufactures products

Question 3

which stakeholders are interested in knowing the size of businesses

Answer 3

1) investors- to see which business to put their savings into
2) governments- to come up with tax rates for small and large businesses
3) competitors- to compare size and importance with other firms
4) workers- to see how many people they may be working with
5) banks- to see which business to loan to

Question 4

ways of measuring size of a business

Answer 4

1. number of employees
2. value of output
3. value of sales
4. value of capital employed

Question 5

advantages of methods of measuring bs size

Answer 5

1. number of employees - easiest way of measuring size and comparing with other businesses
2. value of output - common way of comparing firms in the same industry
3. value of sales - often used for retailers especially retailers selling similar products e.g. food supermarkets
4. value of capital employed - it is the total value of capital invested into the business

Question 6

disadvantages of methods of measuring business size

Answer 6

1. number of employees - some firms are labour intensive and others are capital intensive meaning the labour intensive firm will have more employees. the sector of a business also plays a part for instance a manufacturing company e.g. cement makers will have more employess than a service provider e.g. hair stylist as well as multinational companies and local companies
2. value of output - when comparing to other methods of measurement this may not be a very accurate way; a firm may sell very expensive computers each year meaning higher input where as another firm may sell cheaper products with more employees
3. value of sales - it can be misleading when comparing businesses that do not operate in the same field e.g. a fish market and a luxury car seller\
4. value of capital employed - some companies are capital intensive meaning more money is required for capital equipment hence using this way is not very reliable

Question 7

importance of objectives to businesses

Answer 7

• it gives workers and managers clear goals to work towards helping to motivate people
• it serves as a guideline for decision making
• clear objectives help to unite the business
• it serves as a guideline to measure and compare the performance and success of a business