The role of markets Flashcards
Market
A way of bringing together buyers and sellers in order to buy and sell good and services
Market economy
An economy in which scarce resources are allocated by the market forces of supply and demand
Primary sector
The direct use of natural resources including extraction of basic materials and goods from land and see
Secondary sector
All activities in an economy concerned with either manufacturing or construction
Tertiary sector
All activities in an economy that involve the idea of a service
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
Specialization
The process by which individuals, firms, regions and countries focus on producing those products that they are the best at doing
Exchange
The giving up of something that an individual or firm had in return for something they wish to have, but do not possess
Benefits of specialisation for producers
-Higher output
-Higher Productivity
-Higher Quality
-Economies of scale
-Larger consumer demographic
-Save time and money
Cost of specialisation for producers
- Diseconomies of scale
-Fragility - Loss of interest from workers
- May not be able to buy necessary resources
Benefits of specialisation for workers
- Increased skill and wages
- Increased job satisfaction if they love it
- Increased standard of living via earning more
Costs of specialisation for workers
- Boredom leading to demotivation
- Deskilling AKA loss of adaptability
- Structural Unemployement
Benefits of specialisation for regions
- Region makes best use of its resources
- Creates jobs
- Development of infrastructure and supply industries
Costs of specialisation for regions
- If demand falls then industry may collapse
- If resources run out, those employed will be left without jobs
- Loss of advantage if another country becomes better at the speciality
