Flashcards · 0715 · Topic 1

Commerce and production flashcards

12 cards on Topic 1, subtopics 1.1 to 1.2. Pick a subtopic or study them all.

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What is commerce?: All the activities involved in distributing goods and services to the consumer: trade (buying and selling) plus the aids to trade that support it.
Needs vs wants: Needs: essentials for survival, such as food, shelter and clothing. Wants: everything people desire beyond their needs.
What is opportunity cost?: The next best alternative given up when a choice is made. It arises because resources are limited but wants are not.
Home trade vs foreign trade: Home trade: buying and selling within one country. Foreign trade: buying and selling across national borders, which adds different currencies, customs duties, more documents and longer transport times.
Name the main aids to trade: Banking, insurance, transport, warehousing, communication and advertising.
Place utility vs time utility: Place utility: value added by transport moving goods to where they are wanted. Time utility: value added by warehousing storing goods until they are wanted.

What is production?: The creation of goods and services to satisfy human wants.
What are the four sectors of production?: Primary (extractive): mining, farming, fishing, forestry. Secondary: manufacturing and construction. Tertiary: commercial services (trade and aids to trade) and direct services. Quaternary: digital technology.
Commercial services vs direct services: Commercial services: trade and the aids to trade that help distribute goods. Direct services: services given straight to people, such as doctors, teachers and hairdressers.
What is specialisation?: Concentrating on producing one thing, or one part of a process, rather than a whole range. It makes exchange, and so commerce, necessary.
Give an advantage and a disadvantage of specialisation for an individual, a factory and a country: Individual: highly skilled; but work is repetitive. Factory: can mechanise and gain economies of scale; but relies on one product. Country: exports what it makes efficiently; but depends on imports and trade.
What is the chain of production?: Extraction → manufacture → wholesale → retail → consumer. Each stage adds value, for example by processing, branding, transporting or storing.