Flashcards · 7100 · Topic 1

Commerce and production flashcards

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

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Define commerce: The distribution of goods and services to consumers: trade plus the aids to trade (banking, transport, insurance, warehousing, communication and advertising) that make distribution possible.
How does home trade divide?: Into wholesale trade (selling in bulk from producer to retailer) and retail trade (selling in small quantities to the final consumer).
Imports vs exports: Imports: goods and services bought from other countries. Exports: goods and services sold to other countries.
What is utility, and what are form, place and time utility?: Utility: the ability of a good or service to satisfy a want. Form: changing a product to make it more useful (timber into furniture). Place: moving it to where it is wanted. Time: making it available when wanted.
Why does scarcity force people to make choices?: Resources are limited but wants are unlimited, so choosing one thing means giving up the next best alternative, its opportunity cost.

Classify: fishing, house-building, banking, app development: Fishing: primary. House-building: secondary (construction). Banking: tertiary (commercial service). App development: quaternary (digital technology).
Why does commerce belong in the tertiary sector?: Primary output is in the wrong form, and secondary output is in the wrong place and often at the wrong time. Tertiary commercial services close these gaps by distributing goods.
Give one advantage and one disadvantage of specialisation for a worker: Advantage: higher output and greater skill at the task. Disadvantage: repetitive, demotivating work and a narrow set of skills.
Why does a country specialise?: To use its natural or acquired advantages, such as climate, resources or skilled labour, efficiently and export the surplus. The risk is over-dependence on trade and on imports.
Why does specialisation make commerce necessary?: Specialisation → interdependence → exchange: a specialist produces far more of one thing than it needs and too little of everything else, so it must trade.
Cotton farmer → mill → wholesaler → retailer: which utility does each stage add?: Farmer: primary production. Mill weaving cloth: form utility. Wholesaler storing stock: time utility. Transport to retailers: place utility. The retailer completes the chain to the consumer.