Section 1.2 Classification of Businesses

Question 1

What are the three sectors business is classified into?

Answer 1

Primary, secondary and tertiary

Question 2

What is the primary sector?

Answer 2

The primary sector involves extracting or harvesting natural resources. It provides raw material to the secondary sector

Question 3

Examples of primary sector.

Answer 3

Fishing, farming, forestry, mining

Question 4

What is the secondary sector?

Answer 4

Firms that process and manufacture goods from natural resources

Question 5

Examples of secondary sector.

Answer 5

Refining (oil refining), manufacturing (cars, chairs), construction

Question 6

What is the tertiary sector?

Answer 6

Firms that supply a service to consumers and other businesses

Question 7

Examples of tertiary sector.

Answer 7

Shops, restaurants, banks, cinemas, airlines

Question 8

What is chain of production?

Answer 8

The production and supply of goods to the final consumer involves activities from primary, secondary, and tertiary sector businesses. The sectors depend on each other.

Question 9

Example of chain of production,

Answer 9

Primary: Oil is extracted from underground
Secondary: Oil is refined to produce petrol or gas
Tertiary: The petrol or gas is delivered to the customer by gas stations

Question 10

What is LCD?

Answer 10

Less developed country or developing country

Question 11

What is MCD?

Answer 11

More developed countries or developed country

Question 12

What are features of a developing country?

Answer 12

• Low income
• Low life expectancy
• Low levels of education and healthcare
• Mostly employed in the primary sector

Question 13

What are features of a developed country?

Answer 13

• Manufactured goods are imported
• Improved standard of living
• Increased freedom
• Mostly employed in the tertiary sector
• Higher income

Question 14

How can you identify a developing country by looking at the size of their business sectors?

Answer 14

Developing countries have a high percentage of people working in the primary than in the tertiary

Question 15

How can you identify a developed country by looking at the size of their business sectors?

Answer 15

Developed countries have a high percentage of people working in the tertiary than in the primary

Question 16

What is industrialisation?

Answer 16

The growing importance of the secondary sector and reduced importance of the primary sector

Question 17

What is de-industrialisation?

Answer 17

The growing importance of the tertiary sector and the reduced importance of the secondary sector

Question 18

How can higher incomes affect consumer behaviour?

Answer 18

Consumer demand better quality and a wider choice of products

Question 19

How can better education affect consumer behaviour?

Answer 19

Consumers expect better products and know they can buy goods from different suppliers (in different countries through e-commerce)

Question 20

How can more leisure time affect consumer behaviour?

Answer 20

The demand for leisure activities will increase

Question 21

What is a mixed economy?

Answer 21

An economy where the resources are owned and controlled by both the private and public sectors

Question 22

What is a private sector?

Answer 22

The part of the economy that is owned and controlled by individuals and companies for profit

Question 23

What is the public sector?

Answer 23

The part of the economy that is controlled by the state or government

Question 24

Examples of organisations in the private sector.

Answer 24

Sole traders
Limited companies
Partnerships
Franchises, joint ventures, social entreprises

Question 25

Examples of organisations in the public sector.

Answer 25

Government departments
Public organisations
National industries

Question 26

Who answers the three questions of what, how and whom to produce in the private sector?

Answer 26

What to produce: Consumer decide
How to produce: Firms want to make profit
For whom to produce: Consumer’s buying power

Question 27

Who answers the three questions of what, how and whom to produce in the public sector?

Answer 27

What to produce: The government decides
How to produce: The government decides
For whom to produce: The government decides