1.1 - business activity Flashcards
business activity
what is a need?
something required for living e.g. food, water, shelter
what is a want?
something that is desired, but not required for living e.g. makeup products
what is scarcity?
when there are a lack of products/services to fulfil the needs of the population
what is opportunity cost?
the next best alternative given up by choosing another item
what are the 4 factors of production
Land - all natural resources eg. mineral resources
Labour – people available to make the product
Capital – finance, machinery and equipment to make the goods and services
Enterprise – the skill and risk-taking ability of the managers and owners
what is specialisation?
when people and businesses concentrate on what they are best at.
what is division of labour?
when the production process is split into different tasks and each worker performs one
specific tasks only.
what is the purpose of business activity?
to combine the factors of production to make products which will satisfy peoples wants
2 advantages of division of labour
- workers are trained in one specific task - increases efficiency and output
- less time is wasted moving from one workbench to another
2 disadvantages of division of labour
- workers may become bored of one job - decreased efficiency
- if a worker is absent, no one else will be able to do the job - production may be stopped
what is added value?
the difference between selling price and the cost of bought-in materials.
why is added value important?
- helps pay for operating expenses e.g. labour, advertising, bills, tax
- helps make a profit
how can added value be increased?
- by increasing the selling price
- by decreasing the cost of bought in materials
what is economic problem?
when there is unlimited wants but limited resources to produce goods and services to satisfy wants. this creates scarcity
