1.1 Business activity Flashcards
What are needs?
Things necessary for survival (e.g., food, water).
What are wants?
Things we desire but don’t need to survive (e.g., phones, luxury items).
What is the economic problem?
There are unlimited wants, but limited resources.
What is scarcity?
Not having enough resources to satisfy everyone’s wants.
What are the factors of production?
The resources needed to make goods and services:
Land
Labor
Capital
Enterprise
What is land in business?
Natural resources used to make goods (e.g., land, water, raw materials).
What is labor in business?
The effort (physical or mental) people put into work.
What is capital in business?
Money, machinery, or equipment needed to make goods.
What is enterprise in business?
People who manage, organize, and take risks to run a business.
What is opportunity cost?
What you give up when you make a choice.
What is specialisation?
Focusing on doing one thing really well.
What is division of labor?
Splitting work into smaller tasks, each worker does one part.
What is an advantage of specialisation?
Workers get better at their tasks and work faster.
What is a disadvantage of specialisation?
Workers may get bored from doing the same task over and over.
What happens if a worker is absent in specialisation?
Production may stop or be slower.
What is purpose of business activity?
To combine resources and make products that meet needs and wants.
What is added value
The extra value created by turning raw materials into finished products.
How do you calculate added value?
Selling price - Cost of materials.
Why is added value important?
It helps a business make profit and pay for other expenses.
How can a business increase added value?
By improving quality or lowering costs while keeping the price the same.
What does a business do with added value?
It can be used to pay for other business expenses or increase profit.
What is land in the factors of production?
Natural resources used to make goods.
What does capital include?
Machinery, money, and equipment used in production.
What is the main goal of business?
To combine scarce resources to produce goods and services that meet people’s needs and wants.
What happens if resources are scarce?
Businesses have to make choices and face opportunity costs.
What is the relationship between specialisation and efficiency?
Specialisation helps increase efficiency and reduce waste.
Why does specialisation lead to economies of scale?
Because larger-scale production reduces cost per unit.
Why might specialised workers need higher wages?
They have more skills, and the work may be more demanding or boring.
What happens if a product has high added value?
The business can sell it for a higher price and make more profit.
