Please enable JavaScript.
Coggle requires JavaScript to display documents.
Economics 2.1 - Role of Markets - Coggle Diagram
Economics 2.1 - Role of Markets
Key Vocab/Terms
Market
- a way of bringing together buyers and sellers to buy and sell goods and services
Specialisation
- the process of concentrating on producing those things you're best at producing
Exchange
- the giving up of something that you have in return for something you desire but do not have
Sector
- An area of the economy in which businesses share the same of related activities
Innovate
- to introduce something new or make changes to something established
Division of labour
- where workers specialise in, or concentrate on, one area of the production process
Secondary sector
- all activities concerned with manufacturing or construction
Tertiary Sector
- all activities in the economy that involve the idea of a service
Factor market
- markets where the services of factors of production are bought and sold
Product market
- markets where goods and services are offered to consumers, businesses and the public sector
How has the UK economy changed in the last 15 years?
What is a market?
A market is where buyers and sellers come together to buy and sell goods and services. It can be physical or a virtual environment.
What is a product market?
A market where finished goods and services are offered to consumers, businesses and the public sector and they are not concerned with the buying and selling of raw materials.
What is a factor market?
The market where the services of the factors of production (CELL) are bought and sold. Price for each factor is based on supply and demand and is a derived demand.
What are the 3 different sectors?
What is the primary sector?
the direct use of natural resources. The extraction of basic goods from the land and sea.
What is the secondary sector?
All economic activity concerned with either manufacturing or construction
The
manufacturing
includes both
direct
use (using raw materials to make a finished product) and indirect use (using raw materials to make a component of something else).
Construction is the process of constructing a building or infrastructure
What is the tertiary sector?
All economic activity where a service is provided. Services can be provided firm to firm, individuals or the government. The only sector concerned with dealing with people directly.
What is exchange?
Giving up something an individual has in return for something they need but do not possess. All of the economic behaviour involves the exchange of one scarce resource for another and in today's world, this would be money.
Specialisation
What is specialisation?
When individuals, firms, regions or counties concentrate on producing the goods and services they have an advantage in making it more efficient and sometimes increasing output. Also, this can apply to all the factors of production.
This could mean that they have to give up producing other goods and services
How does specialisation impact consumers?
Benefits
Higher output
Higher productivity
Higher quality
Bigger market
Costs
Diseconomies of scale (eventually)
Dependency
Failure of exchange
How does specialisation impact regions?
Benefits
Efficient use of resources
Creates jobs for residents
Infrastructure development
Costs
Risk of fall for demand
Resource exhaustation
Loss of adventure
How does specialisation impact workers?
Benefits
Increased skill
Natural strength
Increased job satisfaction
Costs
Boredom
Deskilling
Unemployment
How does specialisation impact countries?
Benefits
Economies of scale
More jobs
International trade
Costs
Unemployment
Over-dependence
Over-exploitation