2.1 Role of markets

• What is a market?


  A way to bring buyers and sellers together
• What are the different forms a market can take?

  Stall, shop, auction, or online
• What type of economy is the USA?

  Free market economy
• How are market decisions made in a free market economy?

  Dictated by supply and demand
• What type of economy is the UK?

  Mixed economy
• How are decisions made in a mixed economy?

  Shared by market and government
• What type of economy is North Korea?

  Command (planned) economy
• Who allocates decisions in a command economy?

  Government
• What are the three sectors of the economy?

  Primary, secondary, tertiary sectors
• What does the primary sector involve?

  Direct use of natural resources
• What activities are included in the secondary sector?

  Manufacturing or construction activities
• What does the tertiary sector involve?

  Sale of services
• What is a product market?

  Market for final goods and services
• What is a factor market?

  Market for factors of production
• What is the flow of households in the product market?

  Generates revenue for firms
• What do firms use revenue for in the factor market?

  To pay for factors of production
• What is exchange in economic terms?

  Giving up something for something else
• What is specialization in economics?

  Concentrating on producing best products
• What are the key characteristics of the three sectors of the economy?

  • Primary Sector: Direct use of natural resources
  • Secondary Sector: Manufacturing and construction activities
  • Tertiary Sector: Sale of services
• What are the differences between product and factor markets?

  • Product Market: Final goods and services sold
  • Factor Market: Factors of production bought and sold