Globalisation

Globalisation
              Globalisation means integration of economies by eliminating qualitative and quantitative barriers. It will convert the world in to a global village. It facilitates the movements of goods, services, capital, factors, information and ideas between countries.
             It is referred as Neo colonialism, because 17 th and 18th centuries the Europeans conquered Asian and African countries and made it as a colony for getting the raw materials and market for selling their products. Now the western countries are deciding our taste, preference etc through their products. The speed of globalisation has accelerated by the formation of trading blocs and WTO in 1995 by replacing GAAT. It brings advantages like higher economic growth, standard of living, job opportunities, advanced technology, efficient utilisation of world resources. Moreover it helps the people to access goods and services at a cheaper price. It also brought democratic ideals and new production techniques to developing countries. It reduces the distance between countries through the development of information and communication technology and transportation. It increases world out put and the efficient of producers through the cut throat competition.
                However globalisation create some negative impacts up on the economy and society. It is exploiting natural and human resources of developing countries. It destroys our environment by increasing amount of pollution.It also importing diseases like H1N1, Swin Flu etc.More over the economic or political instability in other country will automatically affect the other countries. Under the globalisation the gainers are the developed countries and losers are the developed countries. It also create some monopolist in the world like Micro soft.
                 In my opinion, it has both advantages and disadvantages , so the effects of globalization depends up on how the economies are exploiting this concept to the benefit of their country. The country should able to forecast its impact in an economy and formulate the policies according to economic situation of the country. So the country should try to minimize the negative impacts and maximize the benefits.

 

UNEMPLOYMENT

UNEMPLOYMENT

          Unemployment means the people those who are able and willing to work are unable to find the job.

Types/Causes of Unemployment

Frictional Unemployment

         If the people move from one job to another, then they want to spend some time for searching and finding a new job. The unemployment between these jobs is known as frictional unemployment. It is temporary and least serious unemployment

Structural Unemployment

        It is due to the structural changes of an industry. If the demand for one product decreases then the people working in that firm will loose the job.

Seasonal Unemployment

      It is due to the seasonal changes of an industry, in some particular seasons demand for the certain products will be low, and then people working in that industry will loose the job. Eg: In off season many of the labours in tourism sector will loose the job.

Cyclical Unemployment

       During the depression period, demand for all the goods and services will below, then people working in all the industries will loose the job. It is the most serious type of unemployment. It is also known as demand deficient unemployment.

Disguised Unemployment

       It is happening the agriculture sector, when the number of labour employed is more than the required amount, then the excess labours productivity will be zero.

Regional Unemployment

      It is due to the declining of the major industry in a one particular region, and then people working in that region will loose the job

Problems/Consequences of Unemployment

Ø  Waste of resources

Ø  Decrease in standard of living

Ø  Social problems like crime suicide etc will increase

Ø  Increase in government expenditure

Ø  Decrease in government revenue

Ø  Increase in poverty

Ø  Economic growth will decrease

Ø  Loss of skill of the labour force

Policies to solve Unemployment

Frictional Unemployment

      It can be solved by giving information about the employment opportunities through the newspaper, radio, television etc

Structural unemployment

       It can be solved by shifting labours from one industry to another

Cyclical Unemployment

      It can be solved by increasing the demand for goods and services through the fiscal, monetary and exchange rate policy

ECONOMIC POLICY/ MACRO ECONOMIC POLICY/ GOVERNMENT POLICY

ECONOMIC POLICY/ MACRO ECONOMIC POLICY/ GOVERNMENT POLICY

     It is the method used by the government to control the economy and to achieve some economic objectives.

Aims of Economic or Macro Economic or Government Policy

Economic Growth

      Economic growth means increase in country’s output and income. It also means increase in real GDP.

It can achieved by increase in public expenditure and reduce in taxes, then income of the people will increase, demand for the goods and services will increase, production will increase, output and income will increase and economic growth also will be high

Full employment

       Full employment means providing employment to the people those who are able and willing to work.

       It also can be achieved by increase in public expenditure and reduce in taxes, then income of the people will increase, demand for the goods and services will increase, production will increase it will provide more employment and the country can achieve full employment

               The above two policies can be achieved by reducing taxes and increase in government expenditure

 

Price Stability

       Price stability means that controlling inflation and its harmful effects

It can be achieved by decreasing public expenditure and increasing taxes, then income of the people will decrease, demand for the goods and services will decrease and price will decrease. It will helps to achieve price stability

Balance of payment stability

       Balance of payment stability means reducing balance of payment deficits.

It also can be achieved by decreasing public expenditure and reducing taxes, then income of the people will decrease, demand for the foreign goods will decrease and imports will reduce, then country can achieve balance of payment stability

Redistribution of income and wealth

       It means equal distribution of income and wealth among the people by imposing high tax up on rich, collect the money and give to poor people as a social security measure

Conflict between Economic Policies

          Some policies are conflicting with others, that is if the government try to achieve some aims then they will loose other, they cannot achieve all the aims at a time.

For example if the government decrease in taxes, then people’s income increases, demand will increase, production will increase, output and income will increase, employment opportunities also will increase, then they can achieve full employment and economic growth. But the increase in income cause to increase in demand for goods and services, increase in price and imports, then we will lose price stability and balance of payment stability

CHOICE OF OCCUPATION

Choice of Occupation
It is the process of selecting different job by different people according to their education, training, skill, talent, interest etc
Factors affecting choice of occupation
 Wage factors
 Non wage factors
Wage factors
 Highly skilled, risk taking and difficult jobs are paid higher wages
 The experienced, trained and highly educated workers will get high wages.
 If the supply of labour is low, then wage rate will be high and if the supply of labour is high then wage rate will be low.
 Non wage factors
 Natural skill : The professions like actors, singers, artist etc need some in born skill.
 Education and training: Selecting the job according to education and training.
 Class attachment: Children may follow their father’s foot step.
 Size of the firm: Prefer large firm as a part of prestige.
 Opportunity for promotion: Accept the job which has more chance of promotion.
 Fringe benefits : Benefits other than salary like free insurance, medical, housing etc
 Working hours : Prefer the job which has less working hours.
 Working condition and job satisfaction: Select the job which has better working condition and more job satisfaction.
 Job security : Select permanent job instead of temporary
 Wage difference between occupations
or
 Why do different occupations have different rates of pay?
 Trade Union : Members of trade union will get higher salary than non members.
 Unsociable hours of working : Occupations need to work night time also, then salary will be higher
 Risky, dangerous and dirty job : Job is more risky, dangerous and dirty, the salary will be higher
 Talent and skills : Special skills and talent required like actors, foot ball players etc, then salary will be higher.
 Lack of information and awareness : Worker has no information about job opportunities, salaries etc , then payment will be lower.
 Education and training : If an occupation required more education and training, then salary will be higher.
 Job satisfaction: Job satisfaction is high, then salary will be lower.
 Other allowances : Many allowances like food allowance, accommodation allowance etc then basic salary will be lower.
 Demand for the product : If the demand for a product increases, then demand for l;abour producing that product increase and salary also will increase
Wage difference with in occupations
 Profit sharing
 Regional difference
 Experience
 Supply of labour
 Increments
 Difference in sex
 Racial discrimination
 Child labour [Explain]
Wage difference between sectors
Primary sectors paid less except mining. In this sector supply of labour is high, they are less skilled, educated and trained.
Secondary sector’s payment also will be low, because work is simple, repetitive and labour can be replaced by machinery.
Tertiary sector’s payment will be high, because it is highly labour intensive, labour cannot be replaced by machinery, the workers in this sector need more education, training, skill. The menial workers like cleaners, waiters etc do not get higher wages.

POPULATION and STANDARD OF LIVING

Standard of Living
It shows how well off an individual or nation is over a period of life.It is generally measured by using per capita GDP, life expectancy, literacy rate, infant mortality rate etc.
Important measures of standard of living
 GNP per head: It is the most important indicator of standard of living
                             Gross National Product
GNP per head = -------------------------------
                               Total population
 Life expectancy: It refers to the average number of years of life for male and female.
 Literacy rate: It refers to the percentage of the people who can read and write.
 Population per doctor: It is the ratio of the number of doctors to the number of people in a country.
 Number of people holding TV , refrigerator, car etc
 Number of students enrolled in secondary school.
 Number of beds in hospital
If the above indicators are high and below indicators are low, the standard of living will be high.
If the above indicators are low and below indicators are high, then standard of living will be low.
 Population growth: It is the difference between birth rate and death rate.
 Crime and suicide rate
 Infant mortality rate: It refers to the number of deaths of infants per year per 1000 of live birth.
 Rate of inflation
POPULATION
 It is the total number of people living in a country over a period of time.
 Trends in population mean changes in population over time.
 High rate of population growth is experienced by poorer regions of the world.
Factors affecting population growth
1. Birth rate
The number of births per population per year.
Number of live births
BR = ---------------------------- x1000
Total population
2. Death rate:
The number of death per thousand of population.
Number of deaths
DR = ------------------------------------ x 1000
Total population
Natural increase in population:- When birth rate is more than death rate, it is called natural increase in
population
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3. Fertility rate: The average number of children a women bear in her lifetime.
4. Net immigration:
 It is the difference between emigration and immigration
 Emigration – People leaving from the country
 Immigration—People coming to the country
 If immigration is more than emigration, population will increase.
Optimum Population
 Optimum population is that which gives the highest income per head of population.
 It is the best and most desirable size of a country’s population.
 If a country’s population exceeds the optimum level, it is said to be overpopulated and if it is below that level ,it is under populated.
Structure of population (Distribution of population)
The population of a country can be divided, based on the following categories.
 Age
 Sex
 Occupation
 Region
 Age distribution
According to age, population can be divided in to
1. Working age group
2. Dependant age group
Working age group
It contains people above the school leaving age (16 years) and below the retirement age (64 years)’
Working population
Working population is the proportion of working age group who are employed or seeking
employment
Dependent age group
All those who are below the school leaving and those who reach the retirement age.
(0 – 15 and 65 and above)
Number of dependent age group
Dependency ratio = ---------------------------------------- X 100
Number of working age group
Optimum population
Total population
Out put per head of population
 Ageing population:
 A country is said to have an ageing population when the average age of the population is high
 It is mostly experienced by developed countries.
Reasons
 low birth rate ( because of better medical facilities, education, family planning)
 low death rate ( because of the advancement in medical fields, better standard of living)
Economic effects
1. Higher government spending on things demanded old people like pension, health care service and social services.
2. Higher dependency ratio
3. Low labour mobility – As old people are less mobile
 Younger age Population:
 A country is said to have younger age population when average age of population is less.
 Experienced by developing countries
 High birth rate ( ignorance of family planning programmes, lack of education, prejudices etc)
 Low death rate ( because of slow improvement in medical facilities)
Economic effects
 High dependency ratio
 Increase in the demand for the goods demanded by younger generation like education, entertainment, providing jobs etc
 Sex distribution:
 It refers to the number of males relative to the number of females in the population.
Reasons for high female ratio
High life expectancy of females.
Economic effects
 More dependency ratio : In many countries females depends up on males
 Pattern of demand will be towards those goods demanded by females like cosmetics
Sex composition
 This means the classification of the total population in to males and females.
Sex ratio
It is the number of males per 100 of females in the population
Population pyramid
It is a diagram that displays a population’s age and sex compositions.
 Occupational distribution:
It is the distribution of working people in various occupations
 Regional distribution:
It is the distribution of population among regions
 Age distribution among developing and developed Countries
Developing countries
 High birth rate and death rate
 High infant mortality rate
 Low life expectancy
 Younger age population will be higher
 40 – 45% of population will be younger
 4% of population will be older
 Dependency ratio will be higher
Developed countries
 Low birth rate and death rate
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 Low infant mortality rate
 High life expectancy
 Ageing population will be higher
 20 – 25% of population will be younger
 15% of population will be older
 Dependency ratio will be lower
 Occupational distribution of population among developed and developing countries
Developing countries
 Most of the labour will be in primary sector
 Self employment will be lower
 Manual workers are high
 Part time job will be lower
 Public sector occupation will be higher
Developed Countries
 Most of the labour will be in tertiary and secondary sector
 Self employment will be higher
 Non manual workers are high
 Part time job will be higher
 Public sector occupation will be lower

Developed and Developing Countries

Developed and Developing Countries
 A developing country is one in which the average standard of living is very low.
 Developing countries are the large group of poor and non industrialized countries. Eg: China, Pakistan, India etc
 Countries which have high standard of living are described as developed countries.
 Developed countries are the small group of rich and industrialized countries.
Eg: UK, USA, Japan etc
Features of Developed and Developing Countries
Developing countries

 High dependence on primary sector:
It depends more on primary sector and less on secondary and tertiary sector.
 Low GDP per head:
As output value of primary sector is much lower than the output value of the secondary and tertiary sector.
 Low capital:
Developing countries do not have capital assets such as large factories, developed transport and communication, modern technology etc.
 High population growth rate:
A high birth rate and low death rate leads to high rate of population growth.
 High infant mortality rate:
Lack of nutritious and poor medical facilities result in high infant mortality rate.
 Low life expectancy:
The average year of life is low in most of developing countries.
 Low literacy rate:
The percentage of people who can read and write will be lower.
 Low labour productivity:
Labour force in developing countries is less educated, less trained, so their productivity will be less.
Developed countries
 Less dependence on primary sector:
It depends more on secondary and tertiary sector and less on primary sector.
 High GDP per head:
As output value of secondary and tertiary sector are much higher than the output value of a primary sector.
 High capital:
Developed countries have developed capital structure such as education, health, transport, communication etc.
 Low population growth rate:
The growth of population is very low because of low death rate and birth rate.
 Low infant mortality rate:
Availability of nutritious food better health facilities etc would reduce infant mortality rate.
 High life expectancy:
Advanced facilities and higher standard of living are the reasons for it.
 High literacy rate:
In developed countries more than 90% of the population can read and write.
 High labour productivity:
Labour force in developed countries are highly trained and educated, so their productivity will be high.

BUSINESS ORGANIZATIONS

BUSINESS ORGANIZATIONS
Sole proprietor:
 A single person owns and controls the business affairs.
Features
 It is easy to setup and cheap to organize
 Decision can be taken quickly but the sole proprietor has unlimited liability.
 He can enjoy all the profits of the company but has to suffer the losses.
Partnership
 Business owned and controlled by a group of individuals ( 2—20 ).
 Partners have unlimited liability and each partner has to contribute capital
Advantages
 Partners bring new ideas and skills to a business
 More partners mean more money for the business
 Partners can help in decision making
Disadvantages
 Partners can disagree
 Partnership have unlimited liability
 Partnership lack capital
Limited Companies
Business organizations owned by many share holders who have limited liability. There are two types:
Private Limited Companies
 Issue shares privately among friends and relatives
 They have separate legal entity.
 It is owned by the share holders, but controlled by board of directors
Advantages
 Shareholders have limited liability
 Shareholders have no management worries
 The company has a separate legal entity.
Disadvantages
 It must publish information about their spending, revenues, profits etc
 It must hold an Annual General Meeting of share holders each year.
 Company profits are taxed twice by the government
 It cannot sell shares through stock exchange market
Types of shares
Preference shares
 The dividend of the share will be a fixed percentage
 The company will divide its profit firstly among preference share holders
Ordinary shares
 The dividend will vary according to the profit of the company
 Ordinary share holders get dividends only after the preference shares receive their dividend.
Public Limited Companies
 They issue shares to the public and shares can be sold at stock exchange
 Share holders own company and receive profits
 The company has separate legal entity
 It is owned by the share holders but controlled by board of directors.
Advantages
 Shareholders have limited liability
 Shareholders have no management worries
 The company has a separate legal identity
 It can sell shares on the stock exchange
 It can advertise their shares.
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Disadvantages
 It must publish information about their spending, revenues, profits etc
 It must hold an Annual General Meeting of share holders each year.
 Company profits are taxed twice by the government
 The original owners of the company may lose control
 It is expensive to form a PLC.
Co operatives
 It is a business organization which is formed in the aim of providing welfare to its members.They can be classified in to two:
Worker co operatives: They are co operatives owned by workers
Consumer co operatives: It is the retail business organization owned by the consumers.
 Multinationals/ Multi national Companies
 It is the largest business organization which operates in more than one country with its head quarters in one particular country Eg: Ford, Nokia etc
Advantages of multinationals to home country/developing countries
 They provide jobs to local labours
 They bring business knowledge, skills and modern technology.
 They may taxes which increase government revenue.
 They bring foreign currency to the country by selling goods abroad
 They improve infrastructure like roads, airport etc
 They widen economic base of the country
Disadvantages of multinationals to home country/developing countries
 Multinationals move their factories to whatever it is profitable to produce. It will cause unemployment
 Most of the profit may go overseas. the home country may not get any benefit
 They may force the home industry to compete with them, it also cause to unemployment.
 Some multinationals may exploit workers by paying very low wages.
 The mechanization reduces the size of labour force in the home country.
 Some multinational may interfere the government of a country
 The highest posts of the firm may be reserved to foreigners.
Advantages of being a multinational company to a firm
 Multinationals are able to sell more than any other type of the company
 Multinationals can avoid transport cost by producing goods in different countries.
 It can take the advantage of different wage levels in different countries
 It can achieve greater economies of scale
 Multinationals have less chance of going bankrupt than smaller companies.
 It can avoid trade barriers
 Multinationals can carry out a lot of research and development.
Public corporations
 It is an organization formed by the government to provide welfare to the public
Nationalization
 Transferring a private industry to a public industry
Privatization
 Transferring public industries to private industries

ECONOMIC SYSTEM

ECONOMIC SYSTEM
Economic System:
The system which decides what to produce, how to produce and for whom to produce is known as economic system.
Traditional Economic System
 It is also known as subsistence economic system
 It is based on some customs and tradition
 They are producing all the goods and services to satisfy their own wants and needs
 The important occupation is farming, fishing and hunting
Market Economic System
 All the resources are owned and controlled by the private individuals and firms is known as market economic system
 In this system price decided by the price mechanism or market mechanism
 Government plays very limited role like defence, maintain law and order etc
 The aim of this system to maximize the profit.
Features
 Private property: All the resources are owned and controlled by the private individuals and firms
 Freedom of choice: Consumers, producers and workers have the freedom choose what they want
 Self interest: It encourages the people to do what is best for them. Consumers, producers and workers will try to maximize their benefits.
 The price mechanism: In this system, the prices of goods and services are fixed by the forces of demand supply.
 Limited role of government: Government has only limited economic functions like secure the defence of the country and to maintain law and order.
Advantages of market economic system
 Freedom of choice: Consumers, producers, workers have the freedom to choose what they want.
 Price mechanism: Automatic operation of price mechanism will decide the price through demand and supply
 No shortages and surpluses: The price system makes sure that shortages and surpluses of goods and services do not last for long.
 Less civil servants are needed: Need only less civil servants to take decision
 Financial incentive: People have a financial incentive to be productive.
 Efficiency: Efficiency will be improved through competition.
Disadvantages of market economic system
 Public goods are not supplied: It would not be supplied the public goods like street lighting, street cleaning, police, defence etc. It would not be easy to charge price for these goods and services.
 Merit goods are not supplied: Market economy cannot supply the merit goods like education, health services etc
 Maximization of profits: It try to maximize profit. They may pay little attention to pollution, working condition, worker’s pay etc.
 Inequalities in the distribution of income and wealth: Some people will be rich and some people will be poor under this system.
 External cost: It will create some cost to third parties by the economic activities of others.
Mixed Economic System
 In this system all the resources are owned and controlled by private individuals and government.
 It combines the advantages of command and market economic system.
Features
 Features of command and market economic system
 Price mechanism and planning authority
 Freedom of choice and national plan.
 Profit motive and social welfare.
 Private sector and public sector
Advantages
 Government can control market failure.
 Government can reduce the inequalities in income by imposing high tax on rich and give social benefits to poor
 Government can control harmful products like alcohol, cigarettes etc
 Government can take over loss making private industries from creating unemployment.
 Consumers have more freedom of choice
 Private sector’s aim is profit maximization, so they will introduce advancement in technology
 It will helps to an increase in economic growth and standard of living.

COST OF PRODUCTION

COST OF PRODUCTION
Fixed and Variable Factors
 The factors which cannot be changed in the form in the process of production is known as fixed factors. Eg: machinery
 The factors which can be changed in the process of production is called variable factors Eg: raw materials
Short run and Long run
 Short run is the period of time in which at least one factor is fixed and others are variable
 Long run is the period of time in which all factors are variable, there is no fixed factors.
Fixed Cost
 Fixed cost is the cost which do not change according to the changes in out put
 Eg: rent on factory building, interest on bank loan, insurance pemium
Whatever may be the level of out put it will be remaining the same.
Variable cost
 Variable cost is the cost which changes according to the changes in out put
 Eg: cost of raw materials, electricity charge etc
It will vary directly with the changes in output.

Total cost
 It is the sum of fixed cost and variable cost
 Total cost = Fixed cost + Variable cost
Average cost
 Average cost is the cost per unit of an out put.
 It is the cost for producing one unit of an out put
 Average cost = Total cost / out put
Marginal cost
 It is the cost for producing additional units of an out put.
 It is the change in total cost by the changes in an out put.
 Marginal cost = ΔTC / Δ out put
Average fixed cost
 Average fixed cost = Total fixed cost / Out put
Average variable cost
 Average variable cost = Total variable cost / Out put
Total revenue
 It is the total income received from the sale of all the units of an out put.
 Total revenue = Price x Out put
Average revenue
 It is the revenue per unit of an out put
 It is the income received from the sale of one unit of an out put
 Average revenue = Total revenue/ Out put
Marginal revenue
 It is the income received from the sale of an additional unit of an out put.
 Marginal revenue = Δ Total revenue/ Δ Out put
Profit maximization theory
The main aim of a firm is to maximize the profit. Profit is the difference between total revenue and total cost (Profit = Total revenue – Total cost). Profit maximization is possible only by reducing total cost and by increasing total revenue.

BASIC ECONOMIC CONCEPTS

BASIC ECONOMIC CONCEPTS        

                                                             

Basic Economic Problem

Ø  Scarce resources and infinite wants

Ø  Resources are limited but wants are unlimited. So all human wants cannot be satisfied with available resources

Ø  It deals with economic decision regarding what to produce, how to produce and for whom to produce

Needs

Ø  The things which are necessary for survival             Eg: food, shelter etc

Wants

Ø  The things which are not necessary for survival       Eg: mobile phone, T.V etc

Scarcity

Ø  Resources are limited in supply.There is not enough goods and services to satisfy all human wants

Choice

Ø  Selection from alternatives

Opportunity cost

Ø  The next best alternative forgone when we make choice. In other words how much amount of one thing we have to be sacrificed for getting another.

Free goods

Ø  The goods which can be obtained without paying any amount of money

Ø  It is unlimited in supply, it has no opportunity cost

Economic goods

Ø  The goods which are available only by paying some amount of money

Ø  It is limited in supply, it has the opportunity cost

Consumer goods

Ø  The goods which are used to give satisfaction directly to the consumers     

 Eg: Coca- cola

Durable consumer goods

Ø  The goods which last for a long period of time            Eg: furniture, T.V etc

Non durable consumer goods

Ø  The goods which do not last for long time                   Eg: vegetables, fruits etc

Producer goods

Ø  The goods which are used in the production of other goods      Eg: Raw materials

Wealth

Ø  Stock of goods which have money value

Income

Ø  The flow of money

Production

Ø  Producing goods and services to satisfy human wants. In other words it is the transformation of inputs to output

Consumption

Ø  Using up of goods and services

Labour intensive technique of production

Ø  Using more labour and less capital for producing goods and services

Capital intensive technique of production

Ø  Using more capital and less labour for producing goods and services

Productivity

Ø  A measure of efficiency with which goods and services are produced

Factors of production

Ø  The resources of land, labour, capital and entrepreneur used to produce goods and services

Land

Ø  It includes all natural resources available on the surface of earth. It is the gift of nature   Eg: surface of earth, sea, forest, hills etc

Ø  Reward – rent

Natural resources           

Ø  It includes all resources available by nature. It is the free gift of nature

            Eg: oil, forest etc

Labour

Ø  It is the mental or physical ability of a person to produce goods and services

Ø  Reward – wages or salaries

Capital

Ø  It is the man made physical goods used for producing goods and services.    Eg: machineries, factories etc

Types of capital

Ø  Fixed capital : Consists of things which do not change in the form in the process of production

Ø  Working capital: Consists of the things which are used up in the production

Entrepreneur

Ø  The person who undertakes the risk and responsibility for employing land, labour and capital

Functions of an entrepreneur are:

a.       risk bearing

b.      decision making

c.       coordinating land, labour and capital

Investment

Ø  It means increase in real capital assets or spending money for capital assets

Stages of production or Economic Sectors

Ø  Primary sector: It is the first stage of production. It extracted raw materials from nature or by growing them

Eg: Fishing, farming, forestry, mining and quarrying

Ø  Secondary sector: It is the second stage of production. It convert raw materials to finished or semi finished goods

Eg: Industries producing steel, furniture, cloth etc

Ø  Tertiary sector: It is the third stage of production. It provide services to primary and secondary sector

Eg: Banking, transport, communication etc

Division of labour

Ø  Dividing the big production process in to small separate task and each task is performed each worker

Advantages of division of labour

Ø  Increased productivity and output, time saving, increased out put, reduced cost of production

Disadvantages of division of labour

Ø  Boredom  of work, craftsmanship lost, risk of unemployment is greater, interdependency

Specialization:

  Concentration in the production of a particular product or task. It includes  

  regional, national, international and specialization by firms and industry. It will

  improve efficiency.

Resources:  The things which are used for producing goods and services. It includes human

                     resources, natural resources, manufactured resources

v Exploitation versus Conservation of resources

Exploitation and conservation both has costs and benefits too. Using the economic resources is exploiting and not using can be regarded as conserving. Country should use resources efficiently to satisfy their wants and needs. If a country using the resources, it helps to increase in production, output and income of the country. It will leads to economic growth.

If a country using the resources, it will leads to an increase in production and employment. Then country can achieve full employment. When a country using their resources, production, out put and export will increase, there by country will get more amount of foreign currency and balance of payment surplus. When a country exploiting the resources, production and out put will increase, it provides goods and services at a lower price and higher standard of living. Finally the exploitation of resources will leads to production, there by average cost will decrease, then country can achieve economies of scale.

                             However country should protect some resources for future generation, should not waste any units of resources. Country can use more renewable resources rather than non renewable resources. For example instead of oil, there is an invention of solar energy.

      Conclusion

In my opinion, using up of resources is advantageous because it bring economic growth, full employment, higher standard of living, and more foreign currency but country should protect some resources for future generation.