1. The Role of Businesses

Question 1

Define what a “business” is.

Answer 1

A business can be defined as the organised efforts of individuals to produce goods and services to sell for a profit, and to fulfil the needs and wants of society,

Question 2

What is the difference between goods and services?

Answer 2

Goods: tangible products that are bought and sold.
Services: intangible, are rather provided to consumers.

Question 3

What are the 4 functions of a business?

Answer 3

1. Operations (production).
2. Marketing.
3. Finance.
4. Human resources.

Question 4

What are the outputs produced by businesses?

Hint: there are 8.

Answer 4

• Innovation
• Employment
• Wealth
• Choice
• Quality of life
• Entrepreneurship
• Income
• Goods/services

Question 5

How do businesses improve our quality of life?

Answer 5

Businesses offer a vast array of products that improve our standard of living.

Our quality of life is also improved by having access to fresh air, clean water, unpolluted earth, conservation of wildlife and protection from toxic sources.

Question 6

How do businesses generate more wealth for us?

Answer 6

More production = more wealth for the economy.

Businesses receive money from the exchange of goods/services, which they then also pay to other businesses for operating expenses. Wealth is also then redistributed to the government, employees, business owners/shareholders, the business itself and lenders.

Question 7

Define ‘entrepreneur.’

Answer 7

Entrepreneurs are those who take risks to transform their ideas into a business

Question 8

What drives innovation for businesses?

Answer 8

Since businesses constantly compete, they are forced to come up with better ideas and products to meet customer needs and wants.

Question 9

What is “choice” and how does it affect consumers?

Answer 9

Choice is defined as the act of selecting among alternatives. Choice allows consumers to choose a different style, quality and price of the product they want - contributes to improving quality of life as well.

Question 10

What are the 3 forms of income that businesses provide?

Answer 10

1. Employees: wages and salaries.
2. Business owners: profits.
3. Shareholders: dividends.

Question 11

How do businesses provide employment?

Answer 11

Businesses employ individuals to assist with the production and distribution of products. As a reward, individuals are paid wages.

Question 12

What is “profit?”

Answer 12

A financial gain made as a result of earning revenue that is higher than the total expenses made to produce a particular good (or service).