UNIT 1

THE ECONOMIC ORGANIZATION OF THE SOCIETY

1.- The economic activity.
Produces goods and services.

2.- Factors of production.

Natural
resources

Capital
Job

Produces goods and services.

NATURAL RESOURCES
- We can find resources in nature. By transformation, extraction or taming
produce goods.

- The most important source to produce goods or consumer products is

natural resources.
- The risk of natural resources is the extinction.
JOB
- We call job to all human activity that is used for producing goods or
useful services to the people.
e.g.: fruits, cereals or wood needs a selection or elaboration job; we
dont consume them as nature offers us.
- Everybody has the right to have a job.
- PAID EMPLOYMENT: It is the most usual. You work for someone.
- SELF-EMPLOYMENT: You work for yourself. (Freelance) e.g.: peasant,
craftsman, dealer
CAPITAL
- The capital is essential to produce goods and service.
- Capital is not just money; it is also buildings, installations, machines or
technologies needed to produce goods and services.

ACTIVITIES
1.- What are economic activities for?
2.- What is the difference between consumer goods and goods of
production?
3.- List five consumer goods and five goods of production.
4.- Which factors participate in production of goods and services?
5.- State the relation between the following goods and their natural
resource:
Paper

fur

plastic

furniture

tires

6.- If a Company has got buildings, will this be considered capital?

3.- Subsistence and market economy.

Subsistence: consumes the entire amount produced. It doesnt produce
excess. Excess: spare part of the production. It is related to developing
countries.
Spare part allows trade and obtains products they cannot produce.
Market economy: it is the main economic system. It is also named capitalism.
It is based on the law of supply and demand, and allows getting a fair price
and satisfies a lot of needs.

Market
functioning
- In a market, products are bought and sold. Buyers and sellers
coincide there.
Sellers want to get the highest profit, and buyers want to satisfy
their needs with minimum expenditure.
Liberalism allows sellers and buyers to establish price with
freedom.
- The price depends on the amount of products and buyers.
SUPPLY

DEMAND

PRICE INCREASES

SUPPLY

DEMAND

PRICE FALLS

The law of supply and demand:

The fight between buyers and sellers allows for a satisfactory price.
The balance between price and amount of sold product is not fixed, it varies
depending on situations.

Factors that could change prices: publicity and advertising.

Publicity and advertising can modify supply and demand and, as a result, the
final price. Publicity and advertising can create a higher demand of a product
and products increase.
Advertising and publicity is necessary to know products or services that a
company offers; and to be informed as better as possible. This publicity shows
products and shows their qualities and functions.
However, there is another kind of publicity that tries to deceive just to sell a
large amount of products.
Publicity and advertising have a lot of influence in society because they are
everywhere, and condition your thoughts about a product.
ACTIVITIES
7.- When does the price of a product rise? What should happen for it to
fall?
8.- Which mass media loves publicity? Why?

Website for extra information:

http://contenidos.educarex.es/sama/2010/csociales_geografia_historia/terce
roeso/actividades_economicas/sistema_productivo.html

4.- Economic agents.

ECONOMIC
AGENTS

These agents are in charge of produce, trade and

consumer goods and services. These agents could be
people, groups or institutions.
3 essential agents are: - Families
- Companies
- Governments

FAMILIES

Represent domestic economies. Their economic

resources come from a salary paid for work done.

Companies are the main economic agent about

production and trade, due to the fact that goods and
services are achieved and commercialised by
companies.
A company makes and commercialise goods and
services through capital and job.
Goods have a cost price. This cost price comes from
the cost of the raw material, energy, machines,
installations, transport, salaries, interest for the bank
loansall these things condition the retail price.
Retail price is higher than cost price. The difference
between cost price and retail price is the profit.
Categories of companies
- By size: Big companies (more than 500 workers)
Medium companies (between 50 and 500 workers)
Little companies (between 1 and 50 workers)
- By economic activity: Primary sector
Secondary sector
Tertiary sector
COMPANIES

GOVERNMEN
T

Group together all the economic activities that the

government makes from taxes.

TAXES FUNCTIONS: - Supporting public administration (central government,

councils, etc.)
- Building infrastructures, equipment, and public
constructions.
- Offering public services: teaching, sanity, transport,
police; and also companies specialised in services as mail,
energy

- Social assistance: pensions, health care, unemployment,

or help for special needs, natural disasters, accidents
TAXES

DIRECT TAXES

INDIRECT TAXES

By income level
pay

workers
(salary)

businessman
(profit)

By consume
pay

All citizens through

consume (IVA, special taxes)

TAX OFFICE SUPPORTS

PUBLIC ADMINISTRATION, PUBLIC INVESTMENTS, SOCIAL ASSISTANCE
ACTIVITIES:
9.- What are economic agents? Mark the main agents.
10.- What kind of companies can we find by their size? Explain your answer.
11.- What kind of companies can we find by their activity?
12.- What are taxes? Explain with your own words.
13.- What are taxes for?

5.- Labour.
Labour refers to the human activity, both physical and intellectual, aimed at
producing goods and services.
In modern societies, there are two types of workers:
- The employers, who are the proprietors or administrators of the companies.
- The employees, who carry out their work in exchange for a salary.
The relationship between an employer and an employee is based on a work
contract.
There are different types of contracts: depending on whether there is a fixed
date for the conclusion of the contract, there are indefinite contracts and
temporary contracts; and depending on working hours, there are full-time
contracts and part-time contracts.
Population can be classified according to its working situation:
- The active population are those who have or want to have a paid job. In this
group, those people who have found a job are the employed population, and
those people who do not have a job or cannot find one are the unemployed
population.
- The inactive population are the students, the disabled, the retired, the
minors and people working exclusively in the housework.
5.1.- Union (syndicate)
Sometimes conditions of workers are not the best (schedule, salary,
security)
Unions are associations to defend the rights of the workers.
Then they can complain through their union leader or works council. These
leaders are chosen freely, and they are in charge of trading with the business
owners about labour deals and collective bargaining.
Workers have the right to strike as a way to show their annoyance about their
conditions of work.
Business owners also have the right to create business associations to defend
their interests.
ACTIVITY
14.- Search the Internet for information about industrial relocation or
deslocalizacin empresarial.

6.- Economic sectors.

Economic activities are classified into three main sectors: primary, secondary
and tertiary.
The primary sector includes the activities based on the extraction of goods
and resources from the environment: agriculture, stock breeding, hunting,
forestry, fishing and mining. Primary activities are carried out in rural, marine
and forest areas, which are usually far from the cities.
The secondary sector includes the economic activities which transform the
goods and resources extracted from the environment (raw materials) into
processed products.
Construction and industry are the main activities in this sector. Industries are
usually located in cities and nearby areas.
The tertiary sector includes activities which provide services of all kind: trade,
transport, tourism, health, communication, education, finance or culture.
The quaternary sector is due to the rapid expansion of the tertiary sector. It
includes several service activities characterised by a high level of
specialisation, such as management, decision-making, high research or the
new technologies.
ACTIVITIES
15.- Fill in the table with jobs.
PRIMARY SECTOR

Teacher
Building worker
Astronaut
Craftsman
Genetic engineering
Fireman

SECONDARY
SECTOR

Merchant
Farmer
Scientist
Miner
Woodcutter
Banker

TERTIARY
SECTOR

QUATERNARY
SECTOR

Fisherman
Doctor
Policeman
Taxi driver
Worker
Shopkeeper

16.- How is the housework distributed in your home? Fill in the table:
HOUSEWORK
Cooking
Going to the
supermarket
Washing up
Doing the
washing
Hanging out the
Washing
Cleaning up
Ironing
Sewing
Fixing the tap
Fixing the
Electricity
Looking after
the
children
Staying at home
when a child is
ill
Going to the
school meeting
Laying the table
Buying some
pieces of
furniture
Buying some
clothes
Making the beds
Cleaning the car
Going to the
bank

FATHER

MOTHER

YOU

OTHER