What best describes economic sectors?

• An organised economic activity, wherein the exchange of goods and services takes place.

• A social science with stakes in many other fields, including political science, geography, mathematics, sociology, psychology, engineering, law, medicine and business.

• An area of the economy in which businesses share the same or related business activity, product, or service. Sectors represent a large grouping of companies with similar business activities, such as the extraction of natural resources and agriculture.

Answer explanation

An organised economic activity, wherein the exchange of goods and services takes place. --- This describes business activity.

A social science with stakes in many other fields, including political science, geography, mathematics, sociology, psychology, engineering, law, medicine and business. ---- This describes economics.

An area of the economy in which businesses share the same or related business activity, product, or service. Sectors represent a large grouping of companies with similar business activities, such as the extraction of natural resources and agriculture. ---- This best describes the different economic sectors.

The economic sectors are Primary, secondary and tertiary, which picture(s) represents the secondary sector?

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Answer explanation

The secondary sector involves economic activities that involve making things, either by manufacturing (TV, car, etc.) or construction (a house, road, etc.). The sector also includes public utilities, such as producing electricity and gas.

The economic sectors are Primary, secondary and tertiary, which picture(s) represents the primary sector?

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Answer explanation

The primary sector includes all those activities the end purpose of which consists in exploiting natural resources: agriculture, fishing, forestry, mining, deposits.

Which picture(s) represent the tertiary sector?

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Answer explanation

The tertiary industry is a technical name for the services sector of the economy, which encompasses a wide range of businesses, including financial institutions, schools, healthcare, hotels, and restaurants.

The ______ sector is the part of the economy that is run by individuals and companies for profit and is not state controlled. Therefore, it encompasses all for-profit businesses that are not owned or operated by the government.

Answer explanation

The private sector is the part of the economy that is run by individuals and companies for profit and is not state controlled. Therefore, it encompasses all for-profit businesses that are not owned or operated by the government.

The ______ sector is a part of the economy that comprises all organisations that are owned and operated by the government. This includes everything from schools and hospitals to roads and bridges. The main purpose of the _______ sector is to provide services that are considered essential for the well-being of society.

Answer explanation

The public sector is a part of the economy that comprises all organisations that are owned and operated by the government. This includes everything from schools and hospitals to roads and bridges. The main purpose of the public sector is to provide services that are considered essential for the well-being of society.

Three advantages of being a sole trader is...

• Unlimited liability

• ​Can get to know customers well

• Can make decisions alone​

• Limited liability

• Few legal requirements​

Answer explanation

Advantages of sole trader

•Few legal requirements​

•Can make decisions alone​

•Choose when to work and prices to charge and who to hire  ​

•Know customers well ​

•Gets to keep the profits 

Disadvantages of sole trader

•Might not have any help ​

•Unlimited liability ​Sources of finance are limited ​

•Hard to take advantage of economies of scale ​

•When sole trader dies the business stops ​

•If entrepreneur is sick the business may stop 

Three disadvantages of being a partnership...

• More capital may be available than a sole trader

• Both partners have unlimited liability 

• Partners can specialize 

• Partnership is not a separate legal entity (if a partner dies then the partnership will end)

• Most countries limit partnerships to 20 people (growth may suffer)​

Answer explanation

Advantages of partnership

•More capital may be available ​

•Motivational for both parties ​

•Partners can specialize 

•Responsibility of running the business is shared

Disadvantages of partnership

•Both partners have unlimited liability ​

•Partnership is not a separate legal entity (if a partner dies then the partnership will end)

•Disagreements can be caused and making decisions takes time ​

•If one partner is inefficient or dishonest it can affect the whole business ​

•Most countries limit partnerships to 20 people (growth may suffer)​

Limited liability is...

• ...is a structure used in business that prevents the owner(s) from being personally liable for business costs and losses.

• ...is a legal structure where full legal responsibility that business owners and partners assume for all business debts. This liability is not capped, and obligations can be paid through the seizure and sale of owners’ personal assets.

Answer explanation

Limited liability offers protection for business owners as well as their investors. The structure of limited liability provides a separation between the owners and their business matters, allowing the business to stand alone as its own entity when facing legal matters or bankruptcy.

Whatever costs the business incurs will be repaid by the business itself since it is seen as a separate legal entity.

In case of bankruptcy, for example, owners, investors, and shareholders will not be held liable for the debts. This means their personal assets, such as their house, their savings, or any other kind of personal assets are not at risk and cannot be used for any sort of repayment regarding business costs.

To receive this protection for your business, you must register it as one of several structures that include limited liability protection.

What is meant by unlimited liability?

• It is a structure used in business that prevents the owner from being personally liable for business costs and losses.

• It is the full legal responsibility that business owners and partners assume for all business debts. This liability is not capped, and obligations can be paid through the seizure and sale of owners’ personal assets, which is different than the popular limited liability business structure.

Answer explanation

Unlimited liability typically exists in partnerships and sole traders. It indicates that whatever debt accrues within a business—whether the company is unable to repay or defaults on its debt—each business owner is equally responsible, and their personal wealth could reasonably be seized to cover the balance owed.

For this reason, most companies opt to form limited partnerships, where one (or more) business partner is liable only up to the amount of money that a partner invested in the company.

Consider, for example, four individuals working as partners, and each invests $35,000 into the new business they own jointly. Over one year, the company accrues $225,000 in liabilities. If the company cannot repay these debts, or if the company defaults on the debts, all four partners are equally liable for repayment.

This means that in addition to the initial investment of $35,000, all owners would also be required to come up with $56,250 to alleviate $225,000 in debt.