1.2.1 - 1.2.5 Flashcards
Creative destruction
Something that just fail in order to learn from it and make it work
Innovation
Using other inventions to create something new that can be profited from
Added value
Cost to make + what extra things happen
Cost of production
How much money is spent on making products
Investment
The purchase of goods that are not consumed today but are used in future to create wealth
Incentives
A cost/benefit that motivates a decision or action by consumers, businesses, or other participants in the economy
Profit
Total generated revenue by a business minus total opportunity costs
Social entrepreneurs
The use of techniques by start up companies and other entrepreneurs to develop, fund and implement solutions to social, cultural, environmental issues
Nonfinancial motives
A company uses methods to motivate employees without extra wages, compensation etc.
Ethical motives
A company makes ethical changes to increase employee motivation
Factors of production
Inputs used in production of goods or services in order to make economic profit
Land
Area owned by business
Labour
Workforce/motivation of workers
Capital
Anything that can enhance a person’s power to perform economically useful work
Enterprise
A project/undertaking that is especially risky or difficult
Specialisation
Individuals/organisations focussing on a limited range of production tasks where they perform best
Exchange
Transfer of goods or services by trading or other means
Efficiency
Every resource is optimally allocated to serve each individual or entity in the best way while minimising waste and inefficiency
Division of labour
Enables workers to focus on specific tasks which increases overall efficiency so long as there is sufficient volume/quantity produced
Working capital
Where most people desire to work,
The place that often has the most job opportunities/highest paid jobs
Interest rates
The amount that has to be paid by the borrower to the lender as an added percentage
Income tax
Personal allowance where tax is free but applies to annual wage
Corporation tax
Tax paid by businesses which is calculated as a percentage of the profit made
VAT
Value Added Tax
20% of the value of sales to lessen the cost of manufacturers
