Unit 2 : Classification of Businesses

Question 1

Define the Primary Sector

Answer 1

extracts and uses natural resources to produce raw materials for other businesses

Question 2

Define the Secondary Sector

Answer 2

manufactures goods using raw materials provided by the primary sector

Question 3

Define the Tertiary Sector

Answer 3

provides services to consumers and other sectors of the industry

Question 4

Define Developing Countries

Answer 4

where the primary sector is the most important, as more employees and output are produced than in the secondary and tertiary sectors

Question 5

Define Developed Countries

Answer 5

where the output of the tertiary sector is often higher than the other two sectors combined

Question 6

Define De-industrialization

Answer 6

when there is a decline in the importance of the secondary sector

Question 7

What are two methods used to compare the sectors

Answer 7

1. percentage of the country’s total number of workers employed in each sector
2. value of output of goods and services and the proportion it is of the total national output

Question 8

3 Reasons for the Changes in the Relative Importance of the Sectors

Answer 8

1. sources of some primary products become depleted
2. developed economies are losing competitiveness to newly industrialised countries
3. rises in living standards cause consumers to spend more of their income on services such as travel and restaurants than on manufactured goods

Question 9

Define Mixed Economy

Answer 9

an economy that has both the private and public sector

Question 10

Define Private Sector

Answer 10

Business that are not owned by the government will decide what and how to produce.

Question 11

What is the Private Sector’s Main Objective

Answer 11

making profits

Question 12

Define Public Sector

Answer 12

businesses and organizations that are owned and controlled by the government. government will decide what and how to produce.

Question 13

What is the Public Sector’s Main Objective

Answer 13

providing a service to customers

Question 14

3 Advantages of Privatization

Answer 14

1. costs can be controlled as the private sector’s main objective is profit
2. more efficient use of capital
3. competition in the private sector helps improve product quality

Question 15

2 Disadvantages of Privatization

Answer 15

1. increased unemployment due to businesses in the private sectors wanting to cut costs
2. less likely to focus on the social objective