1.2.1 Role Of An Entrepreneur In The Economy Flashcards
What is the process of creative destruction
The process of creative destruction is linked to the technological change
Consequences of technological change
Improvements in efficiency & productivity e.g. phones have become cheaper to produce which is why their price has fallen
What can technological change lead to
The development of new products and may destroy existing markets
Why are small & medium sized enterprises important for creating a competitive market
They create jobs, stimulate innovation & investment & promote a competitive environment
Who came up with the idea ‘creative destruction’
Schumpeter
What does creative destruction mean
This is the idea that new entrepreneurs are innovative
Consequences of creative destruction
Challenges firms.
The more productive firms then grow, whilst the least productive are forced to leave the market. This results in an expansion of the economy
Decisions to operate, expand & develop a business
Consider past mistakes, potential profitability & potential gaps in the market
How does decisions also depend on personal circumstances
Implications of this for themselves & whether it will produce a high return
How would an entrepreneur expand a business
By widening their product range
Taking over/ merging with another firm or employing more workers
For an entrepreneur what is the incentive for taking risks
Profit
What does an entrepreneur want
To avoid loss & gain profit, which makes them want to innovate
