igcse sub code 0450 paper 1

1. Classification of Business

2. Stages of economic activity
•
• Primary- Wood cutter Secondary-Furniture maker
Tertiary- Retailer

3. Stage 1 –Primary Stage of production
• Earth’s Natural resources
Activities includes
• Farming, Fishing, forestry
and extraction of natural
materials, such as oil and
copper ore

4. Stage 2- Secondary stage of
production
• Converting the raw
materials and resources
provided by the primary
sector and converting them
into finished good,
Activities include
• Building and construction ,
aircraft and car
manufacturing , computer
assembly , bread baking

5. Stage 3 –Tertiary stage of production
• Providing services to both
consumers and other
business
Activities include
• Transport, Banking, retail,
insurance, hotels and
hairdressing

6. Relative importance of economic
sector
Which sector of industry is most important in
your country ?
Usually three sectors of the economy are
compared by
Percentage of the country’s total number of
workers employed in each sector
Or
Value of output of goods and services and
the proportion this is of total national output

7. In some countries primary industries such as
farming and mining employ many more people
than manufacturing and service industries-
these tend to be countries –often called
developing countries where manufacturing
industry has only recently established, As many
people still live in rural area with low income
there is little demand for service such as
transport .hotels and insurance.
The level of output and employment in the
primary sector is likely higher in these countries

8. • In some countries which
started manufacturing
industries many years ago,
the secondary and tertiary
sector are likely to employ
more workers. The level of
output is often small in
these countries compared to
other two sectors .

9. • In economically developed countries , It is now
common to find that many manufactured
goods are bought in from other countries.
• Most of the workers will be employed in the
service sector and the output in the tertiary
sector will be higher than the other two
sectors
• Such countries are often called most
developed countries

10. Changes in sector importance
• In Uk and other developed economies there has been a decline
in the importance of manufacturing industry
• Since 1970- the tertiary sector in Uk now employs well over 75
per cent of all workers,
• Many workers lost job as factories closed have found it difficult
to obtain work in the service industries
• This decline in manufacturing sector is called de-industrialisation

11. • In China and India ,the relative
importance of the secondary
sector has increased since the
1980’s compared to the primary
sector.
• However in both countries ,many
of the tertiary sector industries
are now expanding more rapidly
than those in primary and
secondary sectors,

12. There are several reasons for changes in the relative
importance of the three sectors
• Source of some primary products such as timber, oil and gas
become depleted,
• Most developed economies are losing competitiveness in
manufacturing to newly industrialised countries such as
Brazil ,India and China.
As countries total wealth increases and living standards rise,
consumers tend to spend a higher proportion of their income on
services such as travel and restaurants .

13. Mixed Economy

14. Private Sector
• Business not owned by
the government,
• Make their own decision
about what and how to
produce and price to be
charged ,
• Private sector will aim to
make a profit .

15. Public Sector
• Government or state owned and controlled businesses
and organisation
• The government or public sector authorities make
decisions about what a how to produce goods and services
and how much to charge consumers
• Health , education services ,
• The money of these comes from the tax payers

16. Public Sector activities

17. Mixed economies- recent
changes
• In recent years the government have changed the balance
between the private and public sector
• They have done this by selling public sector businesses to
private sector .
• This is called Privatisation
• In many European and Asian countries the water supply ,
electricity and public transport system have been privatised

18. Why have government done
this
• Private sector is more efficient than public sector
businesses
• This is because their main aim is profit and therefore
costs must be controlled
• Private sector owners might invest more capital in the
business than the government can afford ,
• Competition between private and public can help to
improve the product quality

19. • However , a business in the private sector might make
more workers unemployed than the public sector business
in order to cut costs
• A private sector business is also less likely to focus on
social objectives