What's covered
Key facts
Economic sectors
The tertiary sector's share of UK employment rose from 51.5% in 1920 to 83.6% in 2016, when the primary sector employed just 1.3% of workers.
Markets and allocation of resources
Through their choices consumers send information to producers about their changing needs and wants, and no single body directs production.
Specialisation, division of labour, and exchange
The division of labour is breaking a production process down into smaller tasks, with each worker specialising in one.
Economic sectors
Goods are tangible things that are produced, bought or sold, and then consumed.
Markets and allocation of resources
In a factor market the factors of production are traded: households sell them and firms buy them, paying rent, wages, interest and profit.
Specialisation, division of labour, and exchange
For a firm, the division of labour raises labour productivity, which lowers the cost per unit and can allow lower prices.
Economic sectors
The primary sector extracts natural resources: the ONS includes agriculture, fisheries and forestry, and mining and quarrying.
Markets and allocation of resources
A market is an opportunity for buyers and sellers to interact in order to establish price.
Specialisation, division of labour, and exchange
The division of labour can cause boredom and alienation; dissatisfied workers may take less pride in their work, quality can suffer and absenteeism can rise.
Economic sectors
The secondary sector produces goods: the ONS includes manufacturing, construction, and gas, electricity and water.
Practice questions with answers
A taste of the 26 questions in this topic, answers marked. Sign up to practise the full set with spaced repetition.
A firm that catches fish in the North Sea operates in which sector?
- ✓Primary
- •Quaternary
- •Secondary
- •Tertiary
Who sells the factors of production in a factor market?
- •Businesses
- •Governments
- ✓Households
- •Retailers
Which best describes the division of labour?
- •Moving production abroad to cut the cost of labour
- •Replacing workers with machines in order to raise total output
- •Sharing a firm's profits equally among all its workers
- ✓Splitting production into tasks, each done by different workers
In ONS statistics, which of these activities belongs to the secondary sector?
- •Banking
- ✓Construction
- •Forestry
- •Retailing
Which of these is traded in a product market?
- •Farmland rented by farmers
- •Loans taken out by firms
- •Nurses hired by hospitals
- ✓Smartphones sold to shoppers
Which was one of Adam Smith's reasons why the division of labour raises output?
- •Customers buy more standardised products
- •Firms need fewer machines on the line
- ✓Less time is lost switching between tasks
- •Workers are paid more for each task done
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