1. Business activity

Question 1

what is a need?

Answer 1

it is a good or service essential for living

Question 2

what is a want?

Answer 2

its is a good or service which people would like to have but which is not essential for living. peoples wants are unlimited

Question 3

what is the economic problem?

Answer 3

there are unlimited wants but limited resources to produce the goods and services to satisfy those wants. this creates scarcity

Question 4

what is scarcity?

Answer 4

is the lack of sufficient products to fulfil the total wants of population

Question 5

define factors of production

Answer 5

are those resources needed to produce goods and services. there are 4 factors of production and they are in limited supply

Question 6

1. define ‘land’

Answer 6

this term is used to cover all natural resources provided by nature and includes fields and forests, oil, gas, metals and other mineral resources

Question 7

2. define ‘labour’

Answer 7

this is the number of people available to make products

Question 8

3. define ‘capital’

Answer 8

this is the finance machinery and equipment needed for the manufacture of goods

Question 9

4. define ‘enterprise’

Answer 9

this is the skill and risk taking ability of the person who brings factors of production or other resources together to produce a good or service. e.x. owner of business

Question 10

define specialisation

Answer 10

occurs when people an businesses focus on what they re best at

Question 11

define division of labour

Answer 11

is when production process is spit up into different tasks and each workers performs one of those tasks (it is a form of specialisation)

Question 12

what are the advantages of division of labour?

Answer 12

1. workers are trained in one task and specialise in this- increase in efficiency and output
2. less time is wasted moving form one work station to the other
3. quicker and cheaper to train workers as lower skills need to be taught

Question 13

what are the disadvantages of division of labour?

Answer 13

1. workers can become bored doing just one task- efficiency might fail
2. if one worker is absent and no-one else can perform that task then production might be stopped

Question 14

what is opportunity cost?

Answer 14

is the next best alternative given up by choosing another item

Question 15

what is added value?

Answer 15

is the difference between the selling price and the cost od bought in materials and components

Question 16

why is added value important?

Answer 16

1. can pay for other costs such as labour, management expenses, advertising and power
2. may be able to make a profit if theses other costs come to a total less other costs come to a total less than the added value

Question 17

how can businesses increase added value?

Answer 17

1. increase selling price but keep cost of materials the same
2. reduce cost of materials but keep selling price the same

Question 18

define businesses

Answer 18

combine factors of production to make products which satisfy peoples wants