Study sheet: Production and Measurement of Wealth

📋 Course Outline

1. Production, Goods, and Services
2. Types of Goods
3. Market and Non-Market Production
4. Businesses and Economic Sectors
5. Public Administrations
6. Social and Solidarity Economy
7. GDP Indicators and Changes

📖 1. Production, Goods, and Services

🔑 Key Concepts & Definitions

• Production : a socially organized activity that creates goods and services to satisfy needs

★ Must-know

📌 Goods are material objects that can be stored, whereas services are immaterial and cannot be stored.

Further detail

• Services are consumed when they are produced and do not necessarily involve transforming raw materials.

• Examples in the course include:

  • trousers
  • mobile phones
  • DVDs
  • cars
  • vacuum cleaners
  • restaurant meals
  • online films
  • SES lessons
  • haircuts
  • train journeys

💡 Memory Hook

Goods are storable and material, whereas services are immaterial and non-storable.

📖 2. Types of Goods

🔑 Key Concepts & Definitions

• Final consumption goods : goods intended for consumption, such as clothes bought in a shop
• Fixed capital : durable production goods used for at least one year to produce other goods or services, such as machines, tools, and equipment
• Intermediate goods : raw materials or goods transformed during the production process, such as flour used for bread and tomatoes or ketchup used in food production

💡 Memory Hook

Final consumption → fixed capital → intermediate goods.

📖 3. Market and Non-Market Production

🔑 Key Concepts & Definitions

• Market production : sold at a price higher than its cost and is generally carried out by private businesses seeking profit, such as bread sold by a bakery
• Non-market production : free or sold at a price below its cost and is provided by public administrations free of charge or at a reduced price, such as a medical consultation

📝 Essential Points

• Some motorways are free because the state manages their maintenance, which is financed by mandatory contributions, whereas motorists pay for other motorways managed by companies.

💡 Memory Hook

Market production is sold above cost, whereas non-market production is free or sold below cost.

📖 4. Businesses and Economic Sectors

🔑 Key Concepts & Definitions

• Business : an organizational unit that produces goods and services and has some autonomy in deciding how to allocate its resources
• Primary sector : produces raw materials through activities such as agriculture, fishing, mining, and forestry
• Secondary and tertiary sectors : The secondary sector transforms raw materials through industry and construction, whereas the tertiary sector provides services and sells production.

📝 Essential Points

📌 Private businesses belong to individuals or companies, whereas public businesses mainly belong to the state.

💡 Memory Hook

Primary extracts, secondary transforms, tertiary provides services.

📖 5. Public Administrations

🔑 Key Concepts & Definitions

• Public administration : an organization dependent on the state that provides non-market production financed by mandatory contributions, including taxes and social contributions

★ Must-know

• Public administrations provide free or partly free services that satisfy collective needs such as education and healthcare.

Further detail

• The main public administrations are:

  • the state
  • local administrations such as municipalities
  • regional authorities
  • social security organizations

• In private schools under contract, part of the expenditure is financed by the state, whereas private schools outside the contract system must finance all their expenditure and therefore have higher fees.

💡 Memory Hook

Mandatory contributions → public services → collective needs.

📖 6. Social and Solidarity Economy

🔑 Key Concepts & Definitions

• Social and solidarity economy : private organizations that do not pursue a profit-making objective and are guided by solidarity and social usefulness

★ Must-know

• ESS organizations include: cooperatives that distribute profits equitably among their owners, mutual societies that reimburse expenses not covered by another mutual society, associations that organize activities serving their purpose

Further detail

• Biocoop was founded by a group of consumers in 1970 with the aim of promoting organic food and operates as a market-producing organization because it makes profits.

💡 Memory Hook

Profit-seeking businesses differ from private ESS organizations centered on solidarity and social usefulness.

📖 7. GDP Indicators and Changes

★ Must-know

• In 2020, the GDP index was 106.2 for Germany, 95.9 for Greece, 104 for Spain, and 100.9 for France.

• Between 2013 and 2020, the GDP growth rate was 6.2% for Germany, -4.1% for Greece, 4% for Spain, and 0.9% for France.

Further detail

• Between 2013 and 2020, the GDP multiplicative coefficient was 1.062 for Germany, 0.959 for Greece, 1.04 for Spain, and 1.009 for France.

📊 Synthesis Tables

GDP indicators by country

Country	GDP index in 2020	Change 2013–2020	Multiplicative coefficient
Germany	106.2	6.2%	1.062
Greece	95.9	-4.1%	0.959
Spain	104	4%	1.04
France	100.9	0.9%	1.009