1.1 Business Activity Flashcards
Needs
Good or services we need for survival
e.g.
Water
Shelter
Food
Wants
Good or services customers desire but not essential for survival
There are unlimited wants
Impossible to be fully satisfied
Scarcity
Scarcity means that there are unlimited wants in customers but lack of resources to possibly fulfil all of them
Specialisation
When people and businesses focus of what they are best at
Division of labour used commonly
Opportunity cost
The next best alternative is forgone due to scarcity and limited resources
Can only pick one over the other when having multiple wants
The item not chosen is the opportunity cost
e.g. The government chooses to spend 10 billion dollars on a hospital and gives up building a road (the opportunity cost)
Division of Labour w adv and disadv
Form of specialisation
Production is split into different tasks and each worker performs one task
Adv
Workers become skilled in the task which improves…
Productivity
Efficiency
Quality
Disadv
Workers may become bored
Required higher wages for specialisation
Work disruption if worker absent
Employees less flexible
Business activity
Combining scarce resources of production to produce production that satisfies customers wants and needs
What does CELL stand for
CELL is the factors of production
Capital
Enterprise
Land
Labour
Capital
Finance, machinery, and equipment needed to manufacture the goods in production
Enterprise
Individuals who coordinate the three other factors who make decisions and take risks
Managers
Heads
CEOs
Land
Any natural resource used in production
Oil
Gas
Forests
Metals
Minerals
Labour
Mental and physical efforts of employees
Ways to add value
Increase the price so there is difference between cost price and selling price
Reduce costs so there is difference between cost price and selling price
Make improvements to the product (qualitative way)
