Production

Revise Production for Commerce 7100 (O Level) — revision notes, 126 practice questions and instant AI marking.

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Cambridge O Level Commerce 7100

Production

The big idea: Production is every activity that satisfies a want, from digging out raw materials to selling the finished good and providing digital services. Businesses and countries produce more by specialising, then decide which jobs to do themselves and which to buy in, and rely on intermediaries and digital technology to move goods along the supply chain.

Summary — What This Chapter Covers

Four sectors: primary (extractive), secondary (manufacturing and construction), tertiary (commercial services and direct services) and quaternary (digital technology).
Specialisation means concentrating on one task or product. It has advantages and disadvantages for an individual, a factory and a country.
In-house production keeps control of quality and information; outsourced production gives access to expertise and cost savings.
A global supply chain crosses borders; a domestic supply chain stays inside one country.
Intermediaries: wholesalers and retailers in home trade; agents and factors in international trade.
Digital technology changes production: automation (robotics) and electronic data interchange (EDI) with suppliers.
The costs of trade, commerce and production can be named and added up in simple calculations.

1. Sectors of Production

Syllabus 1.2.1 · Papers 1 & 2

Primary, secondary, tertiary, quaternary

Every job belongs to a sector. The sector is decided by what the activity does, not by the size of the business.

Sector	Features	Examples
Primary (extractive)	Takes natural resources from the land or sea. Produces raw materials for other sectors.	Farming, fishing, mining, quarrying, forestry, oil drilling
Secondary (manufacturing and construction)	Turns raw materials into finished or part-finished goods, or builds structures.	Car factory, bakery, clothing factory, house building, road building
Tertiary: commercial services	Services that help trade happen: trade itself and the aids to trade.	Retailers, wholesalers, banks, insurers, transport, warehousing, advertising
Tertiary: direct services	Services provided straight to people, not to help trade.	Doctors, teachers, hairdressers, police, lawyers
Quaternary (digital technology)	Knowledge and information services based on digital technology.	Software development, data analysis, cloud services, research, IT consultancy

One business, several sectors

A farmer who grows vegetables (primary) and sells them at her own market stall (tertiary) works in two sectors. A question that asks which sectors she is involved in needs both.

Definition · Specialisation Concentrating on producing one product, or one part of a product or task, instead of doing everything. When a job is split into small tasks done by different workers, this is called the division of labour.

Specialisation for an individual, a factory and a country

Specialisation
Advantages	Disadvantages
Individual: becomes skilled and quick at one job, so can earn higher pay	Individual: repetitive work is boring; skills are narrow, so a worker replaced by a machine finds it hard to get another job
Factory: output rises because each worker repeats one task; specialist machinery can be used; less time is wasted moving between tasks	Factory:
Country:	Country:

Practice Question 1

A mining company quarries limestone. Explain one reason why quarrying is a primary industry.

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Also in the full note

Make it yourself, or pay someone else?
Who stands between producer and consumer
Automation and EDI
Name them, then add them up
Specialisation, sourcing and intermediaries in longer answers

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Production

Production

Primary, secondary, tertiary, quaternary

Specialisation for an individual, a factory and a country

Past papers that test Production

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