Understanding Economic Systems and Sectors
1. Economics Explained
In the 20th century, a new society was created where people interact with money. Currently, the service and leisure sectors are of great importance in industrial development, indicating that we live in a service-based society.
2. Functions of the State in the Economy
- Economics – It establishes the rules regulating economic activity.
- Private Sector Support – It provides support for the promotion of the private sector.
- Sector and Area Development – It assists sectors and areas facing difficulties.
- Public Service Provision – It provides public services (education, healthcare, etc.).
- Job Creation – It generates many public service jobs (teachers, doctors) and uses taxes to finance these activities.
3. Difference Between Public and Private Companies
The main objective of a private company (e.g., Canal+) is to obtain profits, while the primary goal of a public company (e.g., TVE) is to provide a service.
4. The Three Phases of Economic Activity
Production, distribution, and consumption.
5. Primary and Secondary Sectors
- Primary Sector: Includes activities that extract food and raw materials from nature, such as agriculture, livestock farming, fishing, and forestry.
- Secondary Sector: Consists of activities that transform raw materials from nature into developed products, including industry, construction, mining, and energy production.
6. Difference Between the Tertiary Sector and the Other Two
The tertiary sector provides services, unlike the primary and secondary sectors, which deal with tangible goods.
7. Types of Families and Their Participation in the Economy
Families can be composed of one or more members. Families participate in the economy by providing labor for the production of goods and services and by consuming them.
8. Distinguishing Companies by Size and Ownership
- By Size: Micro, small, medium, and large companies.
- By Number of Owners: Companies with a single owner and those with multiple owners.
9. The Traditional Economic System
The traditional economic system is one where production is carried out by the same family to meet their basic needs. Products are only produced for local exchange or sold in the local market. This system is typical of underdeveloped societies.
10. The Communist System
In a communist system, the state controls all means of production, and all companies are state-owned.
11. Characteristics of the Capitalist System
- The means of production are privately owned.
- The goal is to obtain profits.
- The quantity and price of products are governed by supply and demand.
- Competition is encouraged. Any company or person can participate in economic activity.
12. Monopoly and Oligopoly
- Monopoly: A single company controls the production and sale of a product, setting the price and quantity.
- Oligopoly: A few companies control the production and sale of a product.