What is a market
A market is a place where buyers and sellers come together to buy and sell goods and services. It can be physical like with markets that have stall holders, auction houses and shops or it can be intangible like in the case
of internet and catalogue sales.
Sectors of the economy
The economy can be said to be divided into sectors: the primary sector, secondary sector and tertiary sector.
| Sector of the economy |
Description |
Examples |
| Primary |
This refers to all businesses involved in extracting resources from the factor of production land. |
Logging, mining, fishing, farming |
| Secondary |
The secondary sector is all businesses concerned with manufacturing and construction. They take goods from the primary sector and produce products which are usually sold in the tertiary sector. |
Builders, car manufacturers, crisp makers, commercial bakeries |
| Tertiary |
The tertiary sector is all firms that provide a service. This includes retail businesses. This often involves selling goods produced in either the primary or secondary sector to individuals, firms or the government. |
Supermarkets, hairdressers, cinemas, restaurants |
Specialisation and workers
| Advantages |
Disadvantages |
| Workers increase in skill because they do the same task over and over. This may allow them to make more money.* |
Workers lose skills in the parts of their job they no longer do. This may make it harder to get a new job if this one were to be lost. |
| Workers get to do what they love which increases their job satisfaction and quality of life. They may also be able to be more productive and earn more money.* |
Workers may become bored if they repeat the same tasks over and over, decreasing their job satisfaction and quality of life. |
| If workers are able to earn more through specialising then they can afford more of the goods and services they want and will have a better quality of life. |
If there is a fall in demand in the industry workers are specialised in or they are replaced by machinery then it may be hard for them to find alternative employment. |
* A commonly but incorrectly held belief is that if a firm is specialised automatically everyone gets paid more but this is not true. If people are paid a piece rate, meaning they get paid according to their output then specialising
is likely to allow these people to earn more money. Some qualifications that you might obtain in the process of becoming specialised may entitle you to higher wages. Others may have the opportunity to seek promotion or
obtain a pay rise on account of their skills.
Exam style questions
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Questions
Explain what is meant by a market. (2 marks)
A market is a place where buyers and sellers meet(1) to buy and sell goods and services.(1)
Explain how the product and factor markets are interdependent using an example. (2 marks)
The demand for products leads to demand for the resources that make them(1) e.g. As the demand for phones and computers goes up so too does the demand for rare earth minerals that are used in their production.(1) Allow any
suitabe example including demand for employees of certain types increasing as demand increases.
Explain what the primary sector is and give an example. (2 marks)
Any business involved in the direct use of natural resources(1) e.g. Farmers(1) Allow any suitable example
Explain what the secondary sector is and give an example. (2 marks)
The secondary sector is any business involved in manufacturing or construction(1) e.g. builders(1) Allow any suitable example
Explain what the tertiary sector is and give an example. (2 marks)
The tertiary sector is any business involved with providing a service(1) e.g. retailers(1) Allow any sitable example
Case study/Scenario
Josep runs a small firm with 8 employees providing Computer Based Solutions. They work with Microsft Azure, Amazon Web Services, Google Cloud Platform, IBM Cloud. and Oracle Cloud Infrastructure.
Recently he has become concerned after some complaints over issues with quality of some of the work done by his team. Josep is concerned that there may be too much to keep up with by offering to support all of these
different cloud services. There is always a lot of new stuff to learn with each one. He is considering specialising in Microsoft Azure and Amazon Web Services which represent the bulk of his current clients and he feels offers
room for growth.
Evaluate the costs and benefits to Josep as a producer of specialising in just 2 platforms instead of 5. (6 marks)
Sample answer:
With less to knowledge to keep up to date with his programmers could provide a better service {AO2} This would make the businesses he provides computer based solutions for happy and more likely to return
and recommend him to others increasing demand for his services in the future{AO3a} and increasing profit. {AO3a} However it would rely on him winning new customers to succeed as some of his old customers require solutions for systems he will no
longer handle.{AO3b}
Some of Josep's employees may specialise in those other areas and may not be happy having to work in the other environments. These workers may leave. {AO3a} It may prove be difficult to
find new employees and take time to train someone new all affecting productivity and reducing profit. {AO3b}
If specialisation leads to a better quality service and they can attract new customers and keep them happier without losing
a lot of staff, then it will be beneficial for Josep. However, if he does not see an improvement in service and does not gain back the customers he loses or if he loses a lot of staff then it will not be beneficial.
{AO3b}
Additional notes:
Make sure you are in context. Here I have talked about his programmers and referenced his concerns abut quality. I have talked about his computer based solutions. Try to avoid
words like customer and product if you can be more specific about who these will be.
It's an evaluate question so you are looking to provide a developed argument in each direction.
Don't forget that the conclusion should
not be your opinion or a direct answer but is more likely to involve some sort of if then statement.
Other positive arguments you could have made include hiring a secialist that can improve productivity, buying in specialist
tools to assist development in the two specialist environments, saving time as programmers don't have to refresh themselves with a different architecture as often.
Other problems could include a downturn in interest in the two
services they specialise in and upturn in demand for the others. Doubtless there are also possible problems and benefits I have not thought of.
Evaluate the costs and benefits to Josep's employees of specialising in just 2 platforms instead of 5. (6 marks)
Sample answer:
The majority of their customers already use the services they are specialising in, so most of the programmers must be more familiar with them {AO2} and some must prefer them as a result.{AO3a}
This leads to increased job satisfaction increasing the programmers quality of life.{AO3a}
However if there should be a downturn or they find themselves unemployed for some reason it may be harder to find a job
if they no longer have as wide a range of skills in as many systems.This could lead to them being long term unemployed {AO3b} and seriously affecting their quality of life. {AO3b}
For programmers
that get an increased satisfaction from their job it will be a benefit but for those that prefered the systems that are no longer offered they may find it a problem as the longer they stay before finding another role the more
their skills in those other systems will decline and make them hard to employ. {AO3b}
Additional notes:
By mentioning programmers and the systems they work with we ensure the answer is in context.
Because it's an evaluate you should be looking for both sides of the argument.
When it comes to the final statement you are not saying whether you think it will be positive or negative but rather saying for which employees or in which circumstances might it be good and for who and which circumstances might it be bad.
You could also have built a positive argument around workers upskilling and earning more leading to greater standards of living due to having more stuff.
You could make a negative argiment about workers getting bored
with the lack of diversity on their work or deskilling.
Case study/Scenario
Ghana has experienced a period of relatively high growth largely due to specialisms in oil production, mineral extraction and cocoa production. While growth has been good for some time some people in the Ghanaian economy are
worried about how sustainable this growth might be. Manufacturing tends to provide more long term jobs than primary industries and they argue this is where Ghana should be trying to speciaise. However others point to the economic
growth that specialising in primary industries has brought and feel it takes too long and costs too much to establish an effective manufacturing sector.
Evaluate the costs and benefits to Ghana of specialising in primary production. (6 marks)
Sample answer:
Specialisation in primary industries has led to growth for Ghana {AO2} and this means increased employment{AO3a} which in turn means higher incomes, more spending and more government income from taxes.{AO3a}
Oil and minerals are both non renewable resources and cocoa farming can be damaging if not well managed and so there is a risk that resources could be overexploited {AO3b} meaning in the future the country will be heavily invested in an
obsolete industry{AO3b}
If ghana can continue to benefit from job growth in primary industries without overexploiting resources then specialisation in primary industries may be beneficial in the short term, but in the
longer term oil and mineral production will be finite so it is important that some of the money from their growth is spent on developing more sustainable secondary and tertiary industries {AO3}
Additional notes:
Talking about the products they specialise in and referemcing the scenrio where it says it has led to growth help ensure the answer is in context.
Because it's an evaluate you should be looking for both sides of the argument.
When it comes to the final statement you are not saying whether you think it will be positive or negative but rather If this happens it is fine but if that happens probbaly not.
You could also have made a point by talking
about economies of scale or international trade.
On the negative side you could have made an argument about overreliance on a few sectors or the negative externalities that come with mining activities.