1.1 - Business Activity Flashcards
What is a business?
A business is an organization that provides goods and services and satisfies the needs and wants of customers.
What are needs?
The basic requirement for human survival, they are limited. E.g. Water, food, shelter…etc.
What are wants?
Desires apart from those which are necessary for survival, they are unlimited. E.g. Education, vacations…etc.
What is the purpose of business activity?
To attempt to solve the problem of scarcity. Using scarce resources, to produce and sell those goods and services that consumer need and want.
What are the four factors of production? What are the rewards for each?
Land (rent), labour (wage/salary), capital (insurance received on the insurance) and enterprise (profit).
What is land?
The natural resources that can be obtained from nature like oil and minerals.
What is labour?
The physical and mental efforts put in by the workers (number of people) in the production process.
What is capital?
The finance, machinery and equipment needed for the production of goods and services.
What is enterprise?
The risk-taking ability of the person who brings the other factors of production together to produce a good or service.
What is scarcity?
A condition that arises when individuals, firms, governments, or international agencies’ demands for a good or service is greater than the availability of the good or service.
What are the three basic economic problems?
What to produce?
How to produce?
For whom to produce?
What is opportunity cost?
The value of the next best alternative forgone when making a choice.
What is specialisation?
The process by which individuals, firms, and economies concentrate on producing those goods and services where they have an advantage over others.
What is division of labour?
When the production process had been divided into different tasks for a specialised worker to work on.
What are three advantages of specialisation?
- Saves time and energy
- Skill development
- Quicker to train labourers
