1.1 Business Activity Flashcards
What is an organisation
A collection of people and resources with the same goal
What is a business?
An organization that provides goods or services that meet the wants and needs of people, possibly for profit
Define goods
Items that are tangible
You can touch them
Define services
Intangible but add value to products
Define wants
The desire of people
They are not essential for life but costumer’s demand them
Define needs
The basic necessities for life
Define profit
The difference between income and costs
What is adding value
Everything a business does to make a good more desirable
Describe value added
Value is added to basic raw-materials by business. The process of transforming raw materials to finished goods is the value addition
Selling price - raw material cost = value added
Describe scarcity
Resource are scarce in relations to people’s want and need, choices have to be made
Business have to decide what to spend their capital on
What is opportunity cost
Measured of the cost of the forgone alternative when a decision is made
