Commercial World

Lesson Objectives
Students to be able to identify:

• What is commercial world and services?

• Various terms associated with production
• How utility is created?
• Difference between needs and wants
• Factors of production: • land • labour • capital • enterprise.
• Industrial sectors/branches and commerce: • chain of production: 1) primary sector 2)
secondary sector 3)tertiary sector • the relationship between businesses in the primary,
secondary and tertiary sector • the relative importance of each sector within countries.
• Location of agricultural and manufacturing units
• Various forms of Specialisation
• What is Division of labour & its advantages & disadvantages
• Specialisation and need for commerce
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 Advantages of Division of Labour to firms
• Lower costs: Division of labour increases the efficiency of workers.
Wasteful duplica­tion of process and tools is avoided. Large scale production
offers several economies in the use of materials, machinery and skills.
Therefore, costs of operations are reduced. And thus higher profits.
• Simplified training : Specialisation implies that the worker need not learn
the entire job. He needs to learn only a part of the whole task. Much time
and effort is saved in the training of workers. Physical toil is also reduced.
• Inventions: When a worker performs the same job again and again he tries
to discover new and better methods of doing the work. This increases the
possibilities of inven­tions and innovations.
• Greater cooperation and discipline amongst workers
 Disadvantages of Division of labour to firms
• Lack of responsibility: Under division of labour, the final product is not the
output of a single person but the creation of several workers. Therefore, no
individual can be held responsible if anything goes wrong. Involvement of
workers in their work is re­duced.
• Fall in productivity as the work becomes monotonous. So the cost of production
goes up.
• Too much interdependence: Division of labour leads to interdependence
between indi­viduals, firms, industries and countries. Failure of any one link due
to strike, war, breakdown in transport and communication, depression, etc. may
cause great harm. Inferior output by one worker may spoil the quality of the
entire product. Specialists know only a single process of production
• Limited market: The extent of division of labour is limited by size of the market
demand. Division of labour is possible only when the scale of production is
large.
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https://www.investopedia.com/terms/f/factors-production.asp
• Factors of production
• a) Land – Refers to the natural resources which involve both on the surface
and under the surface . The reward for land is rent.

• b) Labour- Refers to physical or mental effort of human being in the process

of production. There are skilled, semi-skilled and unskilled labour. The reward
for labour is wages.

• c) Capital – Refers to manufactured resources such as factories and machines.

The reward for capital is interest.

• d) Enterprise- Refers to an entity which brings all the above resources or

factors of production together for production. Reward for Enterprise is profit.
Specialisation and need for commerce
• Specialisation depends on trade and trade depends on specialisation.
Specialisation leads to mass production hence the need to market the
surplus goods and services.
• Specialization refers to the tendency of countries to specialize in certain
products which they trade for other goods, rather than producing all
consumption goods on their own. Countries produce a surplus of the
product in which they specialize and trade it for a different surplus good
of another country. The traders decide on whether they should export or
import goods depending on comparative advantages.
• Economic interdependence is a consequence of specialization or the
division of labour.
Practice Questions
1) Choose the correct needs.
• Shelter, Clothing, Rice, Technology
• Food, Shelter, Clothing, Water
• Food, Clothing, Shelter, Car
• Health, Safety, Railways, Phones
2) Which of the following is not a commercial service?
• Finance
• Insurance
• Teacher
• Communication
3) Which one of the following is a reason why specialist workers might get bored?
• The training takes too long
• Tasks can be very repetitive
• The pay is low
• There is no opportunity to make friends at work
4) Oil extraction in Nigeria is an example of commercial activity in which sector?
• Primary sector
• Secondary sector
• Tertiary sector
• None of the above
5) Thailand specialises in production of rice. This refers to which type of specialization?
• Country
• Home
• Firm
• Organisation
 Structured Questions.
Write the best answer for each question.

6) Define commerce
7) Briefly explain all three sectors involve in chain of production
8) Explain two advantages and two disadvantages of division of labour
9) Explain 2 forms of specialisation.
10) What are the three factors of production?
11) What are the three branches of production?
12) Explain the factors that determine the location of agriculture units.
13) Explain the factors that determine the location of manufacturing
units.