The Role of Markets Flashcards
What is the purpose of a market?
Markets are a way of bringing together buyers and sellers. (Can be physical, shop, auction and home)
What is a market economy?
An economy in which scarce resources are allocated by the market forces of supply and demand.
What are factor markets?
Where the services of the factors of production are brought and sold.
FACTOR MARKETS: What is the price of the factor determined by?
The interaction of supply and demand.
What is a product market?
Final goods and services are offered for sale and bought by consumers, businesses and the public.
PRODUCT MARKET: What is the price of a product determined by?
The interaction of demand and supply.
What are 2 examples of primary sector production?
Any two from:
- Direct use of natural resources
- Agriculture
- Fishing
- Forestry
- Mining
What are 2 examples of secondary sector production?
Any two from:
- Manufacturing
- Construction
- Refining oil to make petrol
- Wooden furniture
- Cheese
- Components for cars
What are 2 examples of tertiary production?
Any two from:
- Service
- Transport
- Retailing tourism
- Finance
- Media
What is derived demand?
The demand for a good or service which is a consequence to the demand for something else.
What is interdependence?
A system where many companies are economically dependent on each other - they support each other.
What are 2 benefits of specialisation for producers?
Any two from:
Higher output
Higher productivity
What is specialisation?
The process by which individuals firms regions and whole economies concentrate on producing those products that they are best at producing.
What is exchange?
The giving up of something that the individual or firm has in return for something that wish to have but do not possess.
What are 2 benefits of specialisation for producers?
Any two from:
- Higher output
- Higher productivity
- Economies of scale
- Specialisation saves time and money
What are 2 costs of specialisation for producers?
Any two from:
- Dis-economies of scale: as output increased costs may eventually rise
- If one part of the process fails then the whole production may stop
- Movement of workers: workers may become bored and leave or produce less
What are 2 benefits of specialisation for workers?
Any two from:
- Increased skill so they can earn more
- Increased job satisfaction(increases motivation)
- Increased standard of living by earning more
What are 2 costs of specialisation for workers?
Any two from:
- Boredom (leads to de-motivation)
- Deskilling ( workers are unable to do different jobs so are less able to respond to changes
- Unemployment (may be easier to replace with machines
What are 2 benefits of specialisation for regions?
Any two from:
- A region makes best uses of its resources
- Creates jobs for residents near home
- Development of better infrastructure and supply industries
What are 2 costs of specialisation for regions?
Any two from:
- If demand falls the industry may collapse
- If resources run out those employed will be unemployed
- Loss of advantage if another region becomes better at producing
What are 2 benefits of specialisation for countries?
Any two from:
- Countries will specialise in what they do best, leading to greater efficiency and output
- More jobs (increased output may lead to investment in more jobs)
- Increased choice (income output and infrastructure gives a better standard of living)
What are 2 costs of specilisation for countries?
Any two from:
- As specialisation changes, workers in an industry may be unemployed
- Over-specialisation - if world demands changes the economy may collapse
- Increase output leading to over-exploiting resources so unsustainable development
What type of market deals with goods are services?
A product market
What type of market is concerned with the factors of production?
A factor market
