What is the primary sector?
Extracting of raw materials, e.g iron, wood
What is the secondary sector?
Manufacturing from raw materials into sellable goods, e.g Lamborghini, Microsoft
What is the tertiary sector?
Selling of goods or services, e.g teaching, nursery
What is the chain of production?
Production and supply of goods to the final customer, e.g coffee bean farm -> coffee shop
What is an economy?
A system for distributing scarce resources
What is a command economy?
All resources are owned and controlled by the public sector
What is a free market economy?
All resources are owned by the private sector
What is a mixed economy?
An economy where the resources ar owned by both public and private sectors
What is the private sector?
A sector made up of PLCs and LTDs, they aim to maximise profit and is owned by private individuals or groups
Key features of the private sector
Pay tax to the government
Funded by debt or equity
What is the public sector?
Provide public goods and services, owned, funded and controlled by the local or national government
What is the third sector?
A not for profit, values driven company funded and ran by volunteers e.g NSPCC
What is a sole trader?
A business that is owned by just one person
What are key features of a sole trader
Unlimited liability, one owner, can employ others, income tax on profits
What is limited liability
If the business fails, the owners only lose what was invested into the company
What is unlimited liability
If a business fails then the owners have to use their personal wealth to finance any debts
What is a partnership
A business formed by 2 or more people who share responsibility for running the business
Key features of a partnership
Unlimited liability, two or more owners, profit shared between owners, shares are open to the public
What is a private limited company (LTDs)
A business with its own legal identity, distinct from its owners
What are key features of an LTD
Limited liability
Non public shares
Files annual accounts in companies house
What are the advantages of an LTD
Company appears more credible
Easier access to funding for capital growth
Tax efficient
Limited liability
What are the disadvantages of an LTD
Higher costs to setup
Administrative burden (paper work)
Public scrutiny (files accessed by the public)
What is a public limited company ( PLCs)
A company owned by its shareholders but is ran by its directors
Key features of a PLC
Can sell shares to the public
Listed on the stock market
Limited liability
Prestige to being high on stock market
