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Economics > The Role of Markets > Flashcards

The Role of Markets Flashcards

1
Q

What is the purpose of a market?

A

Markets are a way of bringing together buyers and sellers. (Can be physical, shop, auction and home)

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2
Q

What is a market economy?

A

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

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3
Q

What are factor markets?

A

Where the services of the factors of production are brought and sold.

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4
Q

FACTOR MARKETS: What is the price of the factor determined by?

A

The interaction of supply and demand.

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5
Q

What is a product market?

A

Final goods and services are offered for sale and bought by consumers, businesses and the public.

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6
Q

PRODUCT MARKET: What is the price of a product determined by?

A

The interaction of demand and supply.

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7
Q

What are 2 examples of primary sector production?

A

Any two from:

  • Direct use of natural resources
  • Agriculture
  • Fishing
  • Forestry
  • Mining
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8
Q

What are 2 examples of secondary sector production?

A

Any two from:

  • Manufacturing
  • Construction
  • Refining oil to make petrol
  • Wooden furniture
  • Cheese
  • Components for cars
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9
Q

What are 2 examples of tertiary production?

A

Any two from:

  • Service
  • Transport
  • Retailing tourism
  • Finance
  • Media
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10
Q

What is derived demand?

A

The demand for a good or service which is a consequence to the demand for something else.

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11
Q

What is interdependence?

A

A system where many companies are economically dependent on each other - they support each other.

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12
Q

What are 2 benefits of specialisation for producers?

A

Any two from:
Higher output
Higher productivity

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13
Q

What is specialisation?

A

The process by which individuals firms regions and whole economies concentrate on producing those products that they are best at producing.

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14
Q

What is exchange?

A

The giving up of something that the individual or firm has in return for something that wish to have but do not possess.

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15
Q

What are 2 benefits of specialisation for producers?

A

Any two from:

  • Higher output
  • Higher productivity
  • Economies of scale
  • Specialisation saves time and money
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16
Q

What are 2 costs of specialisation for producers?

A

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
17
Q

What are 2 benefits of specialisation for workers?

A

Any two from:

  • Increased skill so they can earn more
  • Increased job satisfaction(increases motivation)
  • Increased standard of living by earning more
18
Q

What are 2 costs of specialisation for workers?

A

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
19
Q

What are 2 benefits of specialisation for regions?

A

Any two from:

  • A region makes best uses of its resources
  • Creates jobs for residents near home
  • Development of better infrastructure and supply industries
20
Q

What are 2 costs of specialisation for regions?

A

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
21
Q

What are 2 benefits of specialisation for countries?

A

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)
22
Q

What are 2 costs of specilisation for countries?

A

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
23
Q

What type of market deals with goods are services?

A

A product market

24
Q

What type of market is concerned with the factors of production?

A

A factor market

Economics (7 decks)

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