Trade

Question 1

What is trade?

Answer 1

It is the exchange of goods and services between people or organisations or groups

Question 2

Why do people need to trade?

Answer 2

Most people cannot make everything they need so they get what they need by trading what they have for what they need.

Question 3

What was trade like in the past when there was no money?

Answer 3

It was called bartering and it is where people traded goods directly i.e. I gave you some of my oranges for some of your bananas. No money changed hands.

Question 4

Why did people start using money when trading?

Answer 4

Because bartering worked well when people were trading items or services of the same value but did not work well when the items were not of the same value. Money solved that problem.

Question 5

What are imports?

Answer 5

Goods that one country buys from another country

Question 6

What are goods?

Answer 6

Physical things that people grow, mine or make.

Question 7

What are services?

Answer 7

Things that people with skills do for other people e.g. fix your computer or your toilet!

Question 8

What are exports?

Answer 8

Goods that one country sells to another country

Question 9

What does it mean that something has value or is valuable?

Answer 9

Typically it means that something has value that is useful to us in some way. But there is a broader philosophical question of who is determining what is value and valuable.

Question 10

What types of things do people trade?

Answer 10

Goods

Question 11

Name the two main types of goods.

Answer 11

1) Raw materials usually come straight from nature and have not been processed or made into anything else e.g. wheat that has not been made into bread, iron that has not been made into steel.
2) Manufactured Goods are made by processing raw materials e.g. wood becomes tables, wheat becomes bread, clay becomes crockery.

Question 12

What is another name for raw materials?

Answer 12

Primary Products

Question 13

What is another name for manufactured goods?

Answer 13

Secondary Products

Question 14

Which of the following items are primary goods? Maize, teaching, shirts, fixing cars, gold, eggs, tinned fish, bread, clay, car, door, frying pan, nursing, coal.

Answer 14

Maize, gold, eggs, clay, coal.

Question 15

Which of the following items are secondary goods? Maize, teaching, shirts, fixing cars, gold, eggs, tinned fish, bread, clay, car, door, frying pan, nursing, coal.

Answer 15

shirts, tinned fish, bread, car, door, frying pan.

Question 16

Which of the following items are services? Maize, teaching, shirts, fixing cars, gold, eggs, tinned fish, bread, clay, car, door, frying pan, nursing, coal.

Answer 16

teaching, fixing cars, nursing.

Question 17

Why are manufactured goods more expensive than raw materials?

Answer 17

1) Manufacturing or processing raw materials adds value to the raw materials because they are made more useful. We pay more for items tat are more useful or valuable to us.
2) Because it costs money to process the raw materials, e.g buying the raw materials, transporting them to the factory, paying salaries to the workers, paying for water, electricity and machines, people sell manufactured goods for more than the original raw materials. People sell goods for more than it cost them to make it in order to make a living.

Question 18

What is profit?

Answer 18

The difference between what it cost for the goods to be produced or bought and what the goods are sold for.

Question 19

You make jam using water, sugar and fruit e.g. apricots.

Which are the raw materials and which are the manufactured goods?

Answer 19

Raw Materials: Water, Sugar, Fruit.

Manufactured Good: Jam

Question 20

What are the raw materials used in making chocolate?

Answer 20

Cacao beans (milk, sugar)

Question 21

Name two countries and one continent that grows cacao beans.

Answer 21

Ghana, Cote de Ivoire, Africa

Question 22

What are cacao beans?

Answer 22

The seeds of the cacao tree that grows in tropical rainforests

Question 23

Name 3 steps in making chocolate

Answer 23

1. Pick the Cacao bean pods. Split open the pods and scrap out the pods. Leave the beans out to dry.
2. Dried Beans are then packed in sacks and shipped to chocolate factories.
3. Beans are roasted and their hard skins are removed. 4. The beans are then ground into a thick paste and sugar and flavouring are added.
4. The mixture is heated gently and poured into moulds.
5. The cooled chocolate is un-moulded, wrapped and shipped to stores for selling.

Question 24

Where are most of the chocolate factories in the world?

Answer 24

Europe, England and America

Question 25

Name three of the costs that are incurred when making chocolate.

Answer 25

1. Paying for shipping the beans to the factories.
2. Paying for the people, machines, electricity to make the chocolate.
3. Paying for the shipping to stores.
4. Paying for the raw ingredients.

Question 26

Which costs more per kilogram: Cacao beans or Chocolate. Why?

Answer 26

Chocolate - lots more. R300 per kg for chocolate vs R8 for the original cacao beans. Tell your parents why.

Question 27

Do the cacao farmers make a profit?

Answer 27

No. Because they do not have much choice of who to sell their beans to and the merchants who buy their beans can usually force the farmers to sell for low prices.

Question 28

What is fair trade?

Answer 28

Everyone involved in the trade is treated equally and in a reasonable way.

Question 29

Name two ways in which trade can be unfair.

Answer 29

1) Trade barriers : are unfair rules imposed on the exporting country by the importing country e.g. quantity limits, taxes on imported goods.
2) Poor working conditions, wages and prices: Companies underpay suppliers of raw materials, allow children to work and pay their workers low wages for long hours.

Question 30

Give me an example of an unfair trade practise.

Answer 30

Check your answer with your parents. One example: the Cacao bean farmers do not have a choice about who they can sell their beans to so they often sell their beans at cost and do not make a profit yet everyone else in the manufacturing of chocolate makes a profit.

Question 31

What is the name of the organisation that farmers and companies can join that ensures everyone involved in the trade is treated fairly?

Answer 31

Fairtrade.

Question 32

How does the Fairtrade organisation work?

Answer 32

It buys the farmers produce at a good price. All members have to obey Fairtrade’s rules about wages, living and working conditions and employment of children. They ensure that everyone involved in trading with them is treated fairly.

Question 33

How do you know if the products you bought have been fairly traded?

Answer 33

Look for the Fairtrade logo on the product.

Question 34

What does it mean to exploit people?

Answer 34

When people are poor they are so desperate that they will work long hours for very poor wages and in poor conditions. Companies and agents often take advantage of this to improve their own profits. Many poor workers, farmers and children throughout the world are exploited.

Question 35

Would you buy Fairtrade products even if they were more expensive?

Answer 35

Discuss your answer with your parents.

Question 36

Finish the sentence:

The goods a country sells to another country are its _______.

Answer 36

Exports

Question 37

Finish the sentence:

The goods a country buys from another country are its _______.

Answer 37

Imports

Question 38

Manufactured goods are usually more _____ than the raw materials of which they are made.

Answer 38

Valuable

Question 39

People who are desperate and sell their goods for low prices or work for very little money are ___ _______.

Answer 39

Being exploited.