Unit 5

Question 1

Define barter.

Answer 1

Swapping one goof for another without the use of money.

Question 2

Define capital productivity.

Answer 2

Output per unit of capital employed.

Question 3

What is division of labour?

Answer 3

The division of labour is specialisation by individuals, who perform different tasks at different stages of production to make a good or service, in cooperation with other workers.

Question 4

Define labour productivity.

Answer 4

Labour productivity is the output per worker.

Question 5

What is a market?

Answer 5

A market is any convenient set of arrangements by which buyers and sellers communicate to exchange goods and services.

Question 6

Define money.

Answer 6

Any item, such as coin or bank balance which fulfils four functions: a medium of exchange, a measure of value, a store of value and a method of deferred payment.

Question 7

Explain the function of money as a medium of exchange.

Answer 7

Money is used to buy and sell goods and services. Workers accept payment for their labour in money because they know that they will be able to use that money to buy goods and services.

Question 8

Explain the function of money as a measure of value.

Answer 8

Money acts as a unit of account, if a dress costs £30 and a skirt costs £15, we know that the value of one dress is equal to the value of two skirts.

Question 9

Explain the function of money as a store of value.

Answer 9

Money acts as a store of value, a workers who receives wages may defer spending because it is more convenient to spend the money later.

Question 10

Explain the function of money as a method of deferred payment.

Answer 10

Money must link different time periods when it comes to borrowed as well as saved money. If people lend money today, they will only do so if they think that they will be able to buy roughly the same amount of goods when it is paid back.

Question 11

What is the primary sector?

Answer 11

The primary sector is made up of the extractive and agricultural industries.

Question 12

What is the private sector.

Answer 12

The private sector is the part of the economy which is owned by individuals, companies and charities.

Question 13

Define productivity.

Answer 13

Productivity is the output per unit employed.

Question 14

What is the public sector?

Answer 14

The public sector is the part of the economy where production is organised by the state of the government.

Question 15

What is the secondary or manufacturing sector?

Answer 15

The secondary sector is made up of industries involved in the production of goods, mainly manufactured goods.

Question 16

Explain specialisation.

Answer 16

Specialisation is a system of organisation where economic units such as households or nations are not self-sufficient but concentrate on producing certain goods and services and trading the surplus with others. Usually in co-operation with others, so that together a complete range of goods is produced.

Question 17

What is a sub-market?

Answer 17

A sub-market is a market which is a distinct and identifiable part of a larger market.

Question 18

What is the tertiary sector?

Answer 18

The tertiary sector is comprised of industries involved in the production of services.

Question 19

Give three types of market and an example for each.

Answer 19

1) National - a homeowner selling her house in Canterbury to buyers living in Worcester.
2) Global - a UK speculator buying diamonds from a seller in Zambia.
3) Local - a man selling apples at the market in Canterbury.

Question 20

What is a product market?

Give an example.

Answer 20

Product markets refer to the buying and selling of goods an services from which the consumer gains utility or satisfaction.
E.g. Bread, beer or cars.

Question 21

What is a commodity market?

Give an example.

Answer 21

Commodity markets refer to the buying and selling of raw materials/minerals that are needed to make products such as copper, oil and barley.

Question 22

What is a labour market?

Give an example.

Answer 22

Labour markets refer to the buying and selling of worker’s time, e.g. the markets for doctors, engineers and electricians.