✅ 1.1 - Purpose & Nature of Businesses

Question 1

What is the purpose of starting a business?

Explain them

Answer 1

• To produce goods OR To supply services that they think customers will pay for
• To distribute products by buying them from a manufacturer and then selling the goods to other businesses and customers
• To fulfill a business opportunity
• To benefit others in society

Question 2

What is the difference between a good or service?

Answer 2

A good is a tangible or physical product whereas a service is an intangible action or non-physical action

Question 3

What is the difference between a need and a want?

Answer 3

Needs are necessities that people cannot live without whereas a want is something that people don’t need but would like to have

Question 4

What is the primary sector?

Answer 4

The primary sector is the sector that produces raw materials

Question 5

Give 3 examples of primary sector businesses

Answer 5

Mining
Farming
Fishing

Question 6

What is the secondary sector?

Answer 6

The secondary sector is the sector that manufactures goods by turning raw materials into finished goods

Question 7

Give 3 examples of secondary sector businesses

Answer 7

• Chocolate factory
• Building and construction industries
• Paper manufacturers

Question 8

What is the tertiary sector?

Answer 8

The tertiary sector is the sector that provides services for other businesses or consumers

Question 9

Give 3 examples of tertiary sector businesses?

Answer 9

Restaurants
Hairdressers
Insurance

Question 10

What are the two meanings of enterprise?

Answer 10

• An enterprise is a business or organisation
• An enterprise is also the qualities an entrepreneur has that allow them to take advantage of business opportunities

Question 11

What could enterprising involve?

Answer 11

• It could involve identifying new business opportunities and taking advantage of them
• It could involve starting a new business or expanding an existing one

Question 12

What is an entrepreneur?

Answer 12

A person who is willing to take a risk to make business ideas happen

Question 13

What are the characteristics of an entrepreneur?

Answer 13

• Hard working
• Innovative
• Organised
• Willingness to take a risk

Question 14

What are the objectives of an entrepreneur?

What are the reasons for becoming an entrepreneur?

Answer 14

• To be their own boss
• Flexible working hours
• To pursue an interest
• To earn more money
• Identify a gap in the market
• Dissatisfaction with current job

Question 15

What types of changes can the business environment experience?

Answer 15

• Technological change
• Economic Change
• Change in legislation
• (+ Change in environmental expectations)

Question 16

What are the four factors of production?

Answer 16

Land, labour capital, enterprise

Question 17

What is the meaning of “land” in the factors of production?

Answer 17

“Land” refers to the physical land where a business is located as well as the natural resources available for a business

Question 18

What is the meaning of “labour” in the factors of production?

Answer 18

Labour refers to the staff and the work they they have done to contribute to the production process

It also refers to the different levels of education, experience

Question 19

What is the meaning of “capital” in the factors of production?

Answer 19

Capital refers to the equipment, factories and offices needed by the business to help produce the goods or provide the services

Question 20

What is the meaning of “enterprise” in the factors of production?

Answer 20

Enterprise refers to the entrepreneurs who take risks and create a business using the other 3 factors of production

Question 21

Define Opportunity Cost

Answer 21

Opportunity cost is the benefit that is given up at the expense of something else

• Businesses must choose where to use their limited resources (even time is a limited resource)